India’s rupee completed its worst week since December on concern Europe’s debt crisis is eroding economic growth in developing nations.
A government report today showed gains in India’s factory output slowed to 1.8 percent in December from 5.9 percent the previous month, less than the 2.6 percent median estimate in a Bloomberg News survey. Europe will not disburse aid to Greece without implementation of austerity measures, Luxembourg Prime Minister Jean-Claude Juncker said in Brussels yesterday.
“There are still concerns emanating from Greece which have impacted the rupee,” said J. Moses Harding, executive vice president at IndusInd Bank Ltd. in Mumbai. “As long as European policy makers keep liquidity easy, India will attract flows as our fundamentals are relatively strong.”
The rupee declined 1.5 percent this week to 49.41 per dollar in Mumbai, according to data compiled by Bloomberg. That is the biggest drop since the five-day period to Dec. 9. The currency touched 49.7625 earlier, the lowest level since Jan. 30.
The currency advanced 0.2 percent today, reversing losses after dropping as much as 0.5 percent earlier, on speculation the central bank sold dollars.
“The Reserve Bank of India wants the rupee to stay in a range and it seems like it will defend 50,” said Roy Paul, general manager of treasury at Federal Bank Ltd.
The government predicted this week India’s gross domestic product will rise 6.9 percent in the year ending March 31, the least since 2009.
Three-month onshore rupee forwards traded at 50.55 per dollar, compared with 50.53 yesterday, while offshore non-deliverable forwards were at 50.55 from 50.50. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.