Rupee Suffers on EU Summit & Poor Prospects for India’s Growth

The Indian rupee dropped today as a disagreement for the European leaders about a way to tackle the debt problems lead to risk aversion sentiment on the Forex market that hurt riskier currencies of emerging markets. Still, the currency managed to rebound at present.
As was expected, the summit of the European Union chiefs has not provided a positive result. And the rupee desperately needs a bullish story, but it has not found it in Europe and it is not likely to find it in India itself. The Organization of Economic Cooperation and Development predicted that India’s growth may remain “subdued” in the fiscal year through March 2013. Indeed, analysts forecast that the economy would expand 6.1 percent in the first quarter of this year from a year ago, at the same rate as in the previous quarter and that was the slowest pace since March 2009.
USD/INR rose from 55.9605 to 56.3900 before trading at 55.9400 as of 10:05 GMT today.

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