India’s rupee headed for its biggest weekly drop since January as foreign investors sold emerging- market assets on concern the global economic recovery is stalling. Overseas funds cut holdings of the nation’s equities by $1.2 billion this month through Aug. 10, exchange data show. The cost of insuring France’s government debt from default rose to a record this week on speculation Europe’s debt crisis will spread to some of its larger economies. Weak economic data from the U.S. and Standard & Poor’s downgrade of its top credit rating have deterred risk taking, with the MSCI Asia-Pacific Index of stocks losing more than 10 percent in the past two weeks. “Some Asian currencies had very difficult sessions due to the risk-off trading,” said Masashi Murata, a Tokyo-based currency strategist at Brown Brothers Harriman & Co. The rupee dropped 1.4 percent this week to 45.3575 per dollar as of 9:42 a.m. in Mumbai, according to data compiled by Bloomberg. That’s the biggest weekly decline since Jan. 7. The currency advanced 0.1 percent today. The Reserve Bank of India has boosted borrowing costs by 3.25 percentage points since the start of 2010 to damp inflation that has held above 8 percent for 18 months. Offshore forwards indicate India’s currency will trade at 45.65 to the dollar in three months, compared with expectations for a rate of 45.69 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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