India’s Rupee Drops as Global Growth

India’s rupee fell, following its biggest weekly loss since February, as signs a global economic recovery is losing steam curbs demand for emerging-market assets. The rupee slid to a two-month low, declining in tandem with stock benchmarks and currencies across Asia’s 10 biggest developing economies. A U.S. report showed consumer sentiment dropped more than economists forecast in July and Treasury Secretary Timothy Geithner said “it’s going to be a while” for a strong, sustainable recovery to take hold in the world’s biggest economy. Investors are of the view that any economic recovery is not in sight, which is keeping the financial markets weak,” said Roy Paul, Mumbai-based assistant manager of treasury at Federal Bank Ltd. “Local assets are going to be under pressure.” The rupee weakened 0.6 percent to 49.295 per dollar as of 9:48 a.m. in Mumbai, according to data compiled by Bloomberg. It earlier reached 49.3625, the weakest level since May 15. The MSCI Asia Pacific Index dropped 1.5 percent, headed for its lowest close since May. Offshore forwards contracts indicate traders predict the rupee will decline to 49.42 in a month, compared with expectations for a rate of 49.11 on July 10. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are used for currencies that aren’t freely convertible and are settled in dollars.

Source : http://www.bloomberg.com/apps/news?pid=20601091&sid=aBGNVvCqbwCo