Mauritius’s Rupee Sets for 1st Weekly Drop in Month on Europe Debt Concern
Mauritius’s rupee headed for its first weekly decline this month against the dollar as concern Europe’s debt crisis may worsen and the U.S.’s credit rating may be cut curbed demand for riskier frontier-market assets.
The currency fell as much as 0.5 percent to 28.45 per dollar before trading at 28.3 by 1:12 p.m. in Port Louis, the capital, bringing this week’s loss to 0.5 percent. The rupee has added 9.1 percent to the dollar this year, the second-best performing currency in Africa after Mozambique’s metical.
Frontier-market stocks fell while the dollar rose against all but one of 16 major peers as investors sought the safest assets before an Italian vote on austerity plans and European bank stress-test results. Standard & Poor’s said it may lower its credit rating for the U.S. as politicians struggle to agree on raising the debt ceiling. The rupee closely tracks the euro’s movements against the dollar, with an average correlation of 0.88 this week. A value of 1 would mean they move in lock step.
“Europe, our main market, is struggling, and that hurts us in turn,” Fabien Gebert, treasurer at GML, a Port Louis-based investment group that says it’s the country’s biggest by revenue, said by phone.
Europe is Mauritius biggest market for tourism and textile products, representing 41 percent of the country’s foreign- currency earnings, according central-bank data. Buying prices for dollars ranged from 27.25 rupees to 27.6 rupees, while the selling price was 28.9524 per dollar, according to indicative exchange rates published on the Bank of Mauritius’s website today.
Mauritian stocks snapped five days of declines, with the 38-member SEMDEX index rising 0.2 percent to 2,060.98 by the 1:30 p.m. close, led by Mauritius Commercial Bank, the Indian Ocean island nation’s largest lender by market value.
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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