Mauritius’s rupee is heading for a second week of declines against the dollar as governments struggle to contain the debt crisis in Europe, the nation’s main trading partner, curbing demand for riskier assets. The currency weakened for a second day, retreating as much as 0.6 percent to 28.25 rupees per dollar and traded 0.1 percent down to 28.125 by 1:37 p.m. in Port Louis, the capital, taking its drop this week to less than 0.1 percent. Versus the euro, the rupee slipped 0.4 percent to 40.0929. Banks’ overnight borrowings from the European Central Bank surged to the highest in three months yesterday, a sign some lenders might have need for emergency cash. Citigroup Inc., DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. said they haven’t cut credit lines to French lenders, in response to speculation that some banks are becoming reluctant to lend to them amid Europe’s sovereign debt crisis. The euro weakened against the dollar “as concerns over French banks increase, with rumors that an Asian bank has cut the credit lines to French banks, and five others were considering following suit,” analysts at Port Louis-based Mauritius Commercial Bank (MCB) wrote in an e-mailed note to clients. The rupee closely tracks the euro’s movements against the dollar, with an average correlation of 0.8 this month. A value of 1 would mean they move in lock step. Almost a third of visitors to the French-speaking island are from Europe’s second-largest economy. Buying prices for the dollar ranged between 27.3892 to 27.5578 rupees, while the selling price was 28.8588 per dollar. according to indicative exchange rates published on the Bank of Mauritius’s website. 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

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