Mauritius’s rupee weakened for a fourth day against the dollar, extending its worst monthly performance since November, as a slump in the euro threatens the Indian Ocean island nation’s exports and tourism.
The currency depreciated 0.2 percent to 29.90 a dollar by 10:45 a.m. in Port Louis, the capital, widening its monthly decline to 2.9 percent. A close at this level will be the lowest since Jan. 24, according to data compiled by Bloomberg.
The euro fell to the lowest in almost two years against the dollar yesterday as Spain struggled to rescued troubled banks, adding to signs the region’s debt crisis is spreading. Europe bought 61 percent of Mauritian manufactured goods in the three months through March, Statistics Mauritius said on May 29. Arrivals from Europe declined 3.3 percent in the four months to April to 221,719, it said.
“The major threat for the country is the declining euro, not the strong dollar,” Swadicq Nuthay, an economist at the city-based Axys Capital Management Ltd., said in a phone interview today. “We have a major mismatch” with the euro as the main foreign currency income and the dollar for imports, Nuthay said.
Countries from India to Brazil are intervening on the foreign exchange market to curb declines in their currencies and rein in inflation. Mauritius’s inflation, at 3.8 percent, is at its lowest since October 2010, according to Bank of Mauritius data.
“Inflation is tamed,” Nuthay said. “It’s nothing to worry about. Commodities prices are falling.”