(MENAFN - Qatar News Agency) The Indian rupee has suffered the biggest weekly drop since September as investors sought the perceived safety of the dollar on concern Greece will leave Europe's currency union.
The rupee weakened for an eighth week, the longest losing streak since 2008, after European Central Bank President Mario Draghi acknowledged this month that Greece might exit the euro area and signalled policymakers won't compromise on key principles to prevent that.
The Dollar Index, which tracks the greenback against six major trading partners, is poised for a fourth weekly gain. India's factory output shrank 3.5 per cent in March from a year earlier, government data showed on May 11.
The rupee's weakness "has been driven by a potent combination of deteriorating global risk sentiment and weak domestic fundamentals," analysts at Barclays Plc's investment- banking unit, including Singapore-based Olivier Desbarres, wrote in a report. "Policy options to support the rupee currently appear limited."
The rupee declined 2.4 per cent last week to 55.7750 per dollar, the biggest drop since the five days to September 23, according to data compiled by (Bloomberg) newswire.
The currency, which touched an all-time low of 56.3875 on Thursday, slipped 0.2 per cent yesterday and will trade around 56 for a month, according to Barclays.
The rupee's one-month implied volatility, a measure of exchange-rate swings used to price options, rose 103 basis points, or 1.03 percentage point, last week to 14.03 per cent.
The Reserve Bank of India is monitoring the market and "will do whatever is necessary" within the scope of its policy to stabilise Asia's worst-performing currency this month, Governor Duvvuri Subbarao told reporters in Mussoorie in northern India.
The rupee has lost 5.8 per cent in May before a May 31 government report that analysts predict will show the economy grew 6 per cent in the first quarter from a year earlier, the slowest pace since March 2009.
Six-month onshore currency forwards traded at 57.52 a dollar, compared with 57.51 on Thursday, and offshore non-deliverable contracts were at 58.16 from 57.84.
Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.