BLBG:Rupee Trades Near A Record Low As Europe Concern Spurs Outflows
India’s rupee traded near a record low on concern investors will favor safer bets than emerging- market assets after European leaders disagreed on ways to contain their region’s debt crisis.
The currency fell for a fourth day as exchange data showed global funds cut holdings of Indian shares by $346 million in the past month. The rupee has lost 6.1 percent this month in Asia’s worst currency performance before a government report that analysts predict will show the economy grew 6.1 percent in the first quarter from a year earlier, matching the slowest pace since March 2009 in the preceding three months.
“Concerns about domestic growth remain and the global backdrop seems to be getting worse,” said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “I expect the rupee to weaken from here as the outflows will continue.”
The rupee declined 0.3 percent to 56.1450 per dollar as of 9:50 a.m. in Mumbai, according to data compiled by Bloomberg. The currency touched a record low of 56.2213 yesterday.
The rupee’s one-month implied volatility, a measure of exchange-rate swings used to price options, declined 70 basis points, or 0.7 percentage point, from this year’s high of 14.5 percent reached yesterday.
India’s growth may remain “subdued” in the fiscal year through March 2013 as inflation curbs consumption and restrains interest-rate cuts, the Organization of Economic Cooperation and Development said May 22. European leaders clashed over a proposal for joint debt sales at the 18th summit in more than two years of crisis fighting, calling on Greece to stick with the budget cuts needed to stay in the euro and offering no immediate relief for recession-wracked Spain.
Six-month onshore currency forwards traded at 57.90 a dollar, compared with 57.93 yesterday, and offshore non- deliverable contracts were at 58.23 from 58.26. 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: Sandy Hendry at shendry@bloomberg.net
