Indian rupee extends losses over Europe's debt crisis

Mumbai: India's rupee fell for the fifth time in six days as concern Europe's debt crisis will escalate deterred risk-taking, spurring sales of emerging-market assets by overseas investors.

The currency extended this quarter's loss to 9.7 per cent, the most since 1992, after US treasury secretary Timothy F. Geithner warned over the weekend that failure to combat the Greek-led turmoil threatened "cascading default, bank runs and catastrophic risk".

Overseas investors sold $253 million (Dh929.01 million) of Indian equities more than they bought on September 22, the most in four weeks, exchange data show. They have cut holdings of Indian stocks by $2 billion from $104.4 billion recorded on July 28.

Short-term concerns

"We expect portfolio flows to stay choppy in the near term until global investor sentiment stabilizes," analysts at Standard Chartered including Mumbai-based Priyanka Kishore wrote in a research note published yesterday. "This would add to the short-term concerns surrounding the rupee."

The rupee was 0.1 per cent weaker at 49.46 per dollar at the 5pm close in Mumbai.