Worst week for rupee since 1995; bond yields ease

The rupee completed its worst week since 1995, as tumbling stocks worldwide fuelled concern the debt crisis in Europe will undermine the global economic recovery. The rupee’s 5.5% loss since April 30, the second-worst performance among Asian currencies.

US jobless claims unexpectedly rose to 471,000 and the Conference Board’s index of key economic indicators posted a surprise drop of 0.1%, separate reports showed on Thursday.

“Economic growth rates are coming under threat globally due to the European debt crisis and this has triggered an erosion of investor confidence,” said RVS Sridhar, senior VP at Axis Bank in Mumbai.

“It’s difficult to predict where the rupee is headed, given that a lot of the action is driven by overnight developments abroad.” Bond yields closed steady after easing to their lowest in more than five-and-a-half months during the day, as worries over euro zone’s debt crisis triggered demand for safe-haven government bonds.