Asian stocks fell today, with the region’s benchmark index’s erasing the year’s gains, South Korea’s won weakened and Japanese bond yields slid to the lowest since 2003 as Europe’s debt crisis worsened and a U.S. factory gauge contracted. The Dollar Index extended a record 15-day rally. Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area as leaders began campaigning ahead of the second national vote in six weeks. The political turmoil has reignited concern the country will renege on pledges to cut spending as required by the two separate rescue packages worth 240 billion euros ($305 billion). That could lead to funding being cut off and has raised the specter of the country leaving the euro. The euro fell to a four-month low as Spain’s borrowing costs rose at an auction, stoking concern that the euro region’s financial woes are spreading from Greece. Europe’s shared currency remained lower against most of its major counterparts after the Fitch cut. Rupee opened at 54.6000/54.6100 against its previous closing of 54.4700/54.4800 and expected to trade in 54.5000/55.0000 range today.
The Indian Rupee fell to a record low (54.86) as investors sought the perceived safety of the dollar over emerging-market assets on concern Europe’s debt crisis is worsening. The local currency headed for the biggest weekly drop in almost six months after Greece’s credit rating was cut by Fitch Ratings yesterday amid concern the country will leave the euro. The Sensex falls 1.12 percent, hitting its lowest intraday since January 9, while Nifty is down 1.2 percent, as Asian shares tumble, rupee hits new record low against the dollar and it is expected to attempt 55.00 the next crucial support level. The Reserve Bank is closely monitoring the rupee’s movement and will act if needed, Deputy Governor H.R. Khan told reporters without elaborating. Most probably, the monetary authority is considering selling dollars directly to oil importers to ease demand for the greenback.
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