By Anil Varma
March 30 (Bloomberg) -- India’s rupee declined the most in almost a month on concern Asia’s weakening economic data will cause overseas investors to take money out of the region.
Offshore forwards contracts show traders increased bets for depreciation in the rupee as Asian stocks and currencies slumped. Japanese industrial production fell for a fifth month in February, the longest losing streak since 2001, a government report showed today, a further sign that the global recession is damping consumer spending.
“Asian stocks and currencies are lower as fresh data suggest the economic crisis is only deepening,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “The rupee is responding to that sentiment as non- deliverable forwards show the way.”
The rupee dropped 0.7 percent to 50.985 per dollar as of 9:41 a.m. in Mumbai, its biggest drop since March 2, according to data compiled by Bloomberg.
The currency is headed for a fifth quarter of declines, the longest run of losses since 2002, and was little changed from the end of February. It’s the second-worst performer among the 10 most-traded Asian currencies in the past 12 months, declining 22 percent.
Japan’s factory output dropped 9.4 percent from January, when it plummeted a record 10.2 percent, the Trade Ministry said today in Tokyo. Inventories fell an unprecedented 4.2 percent. The MSCI Asia Pacific Index of stocks lost 2.8 percent.
Offshore contracts indicate traders are betting the rupee will trade at 51.31 to the dollar in a month, compared with expectations for a rate of 51.13 on March 27. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
To contact the reporters on this story: Anil Varma in Mumbai at avarma3@bloomberg.net.
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