BLBG:Mauritius Rupee Weakens Most in Month as U.S., EU Debt Curb Risk
Mauritius’s rupee weakened the most in a month against the dollar as concern that the U.S. and Europe will struggle to contain their debt burdens curbed appetite for riskier, frontier-market assets.
The currency depreciated as much as 1.8 percent, the biggest intraday decline since June 17, to 28.15 per dollar and traded 1.3 percent down at 28 as of 11:46 a.m. in Port Louis, according to Bloomberg data. Versus the euro, the rupee strengthened 1.6 percent to 40.194.
Standard & Poor’s lowered Greece rating to CC, two steps above default, saying the nation will partially default once European officials implement a second bailout plan. Cyprus’s assessment was reduced to Baa1 from A2 by Moody’s Investors Service. The rupee closely tracks the euro’s movements against the dollar, with an average correlation of 0.89 this month. A value of 1 would mean they move in lock step.
“Greece and Cyprus’s downgrades by Standard & Poor’s and Moody’s Investors Service respectively worsened matters for euro,” Mauritius Commercial Bank, the country’s largest lender by market value said in an e-mailed note to clients.
Europe is the largest buyer of the Indian Ocean Island nation’s exports, with a share of 65 percent, according to the Central Statistics Office said, Europe accounts for 64 percent of visitors to the country, according to Mauritius Tourism Promotion Authority data.
The U.S.’s House of Representatives plans to vote today on a debt-limit increase proposal that confronts unified Democratic opposition in the Senate. Treasury Secretary Timothy F. Geithner has said the U.S. will run out of options to prevent a default on Aug. 2 if the debt ceiling isn’t raised.
Buying prices for the dollar ranged from 27.2007 rupees to 27.3626 rupees, with a selling price of 28.66 rupees per dollar, according to indicative rates on Bank of Mauritius’s website.
Mauritian stocks declined for a second day, with the 38- member SEMDEX gauge retreating 0.2 percent to 2,027.03, led by New Mauritius Hotels Ltd. and Sun Resorts Ltd., the country’s largest leisure operators.
To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1933 or gbell16@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net
