9.9.11

The Rupee slips

The rupee dropped to the weakest level in almost a year on speculation gold and fuel importers stepped up dollar purchases to settle bills. The local currency fell for a fourth day after crude oil traded in New York rose 3.9% to $89.34 a barrel on Wednesday, the highest close since August 3. India imports more than 75% of its fuel requirements. Local gold demand may surge 25% during the Diwali festival season that falls next month, according to Rajesh Exports, the nation’s biggest jewellery maker. The rupee declined 0.05% to 46.20 per dollar at the 5 pm close in Mumbai, according to data compiled by Bloomberg. The currency fell to 46.27 earlier, its weakest level since September 16, 2010. Raghuvanshi forecasts the rupee may drop to 46.75 per dollar by the end of this month. Offshore forwards indicate the rupee will trade at 46.75 to the dollar in three months, compared with expectations of 46.58 on Wednesday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. The Philippine peso and South Korean won led losses among Asian currencies on Thursday after the nations’ central banks joined regional peers Malaysia and Indonesia in leaving borrowing costs unchanged amid signs the global economic recovery is faltering. Investment banks including UBS AG, Credit Suisse Group AG and Morgan Stanley have cut estimates for India’s growth after the Reserve Bank raised interest rates 11 times since mid-March 2010. India’s growth in gross domestic product for the first six months of the current fiscal year will be below 8%, Montek Singh Ahluwalia, deputy chairman of the nation’s planning commission, said in New Delhi today.

No comments: