Indian Rupee Drops to Two-Week Low as Europe Crisis Hurts Growth

India’s rupee fell to the lowest level in almost two weeks on further signs Europe’s debt crisis is hurting growth in Asia’s third-largest economy.

The currency declined for a third day before a report on Aug. 31 that economists predict will show India’s gross domestic product increased last quarter at the slowest pace in three years. The data comes out the same day as Federal Reserve Chairman Ben S. Bernanke meets with global central bank heads in Jackson Hole, Wyoming.

“The environment is glum,” said Naveen Raghuvanshi, a currency trader at Development Credit Bank Ltd. in Mumbai. “The markets seem indecisive and this is likely to continue through the week until the Jackson Hole meeting.”

The rupee declined 0.2 percent to 55.8250 per dollar as of 10:03 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 55.8850 earlier, the weakest level since Aug. 16. The currency is likely to trade between 55.55 and 55.95 today, according to Raghuvanshi.

One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 9.95 percent.

The economy grew 5.3 percent in the quarter ended June from a year earlier, according to the median estimate of 34 economists in a Bloomberg News survey. That matches the growth rate in the previous quarter, which was the slowest since the three months through March 2009.

Three-month onshore rupee forwards traded at 56.85 per dollar, compared with 56.69 yesterday, and offshore non- deliverable contracts were at 56.78 from 56.65. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.

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