India’s rupee rose, after reaching the lowest level in almost three months yesterday, as Moody’s Investors Service maintained its stable outlook on the nation’s investment-grade credit rating.
The currency halted a five-day slide after Moody’s said yesterday India’s Baa3 ranking is supported by economic growth and investment that’s more than emerging-market averages. Asian currencies strengthened after European finance ministers eased terms on emergency aid for Greece and cleared the way for a 34.4 billion euro ($44.7 billion) loan installment.
“It’s a slight rebound on risk appetite in the short term that’s probably not sustainable,” said Abhishek Chauhan, a currency analyst at Edelweiss Financial Advisors in Mumbai. Month-end dollar demand from oil refiners and fiscal-deficit concerns may be a drag on the rupee’s outlook, he said.
The rupee gained 0.1 percent to 55.6850 per dollar as of 10:14 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 55.8825 yesterday, the weakest level since Sept. 6. The currency may trade between 55.50 and 56.00 over the next two weeks, Chauhan said.
One-month implied volatility, a measure of expected moves in exchange-rates used to price options, was unchanged at 9.50 percent.
India’s economy may have expanded 5.5 percent in the three months through September from a year earlier, Finance Minister Palaniappan Chidambaram predicted on Nov. 24, matching the growth rate in the preceding quarter. Economists forecast a 5.2 percent increase in gross domestic product, according to the median estimate in a Bloomberg survey before data due Nov. 30.
Moody’s said the high household-savings rate and a relatively competitive private sector will help boost growth from 5.4 percent in the fiscal year ending March 2013 to 6 percent or higher the following year. The fiscal deficit remains a hindrance to a rating upgrade, it said.
Three-month onshore rupee forwards were little changed at 56.58 per dollar, compared with 56.59 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts advanced 0.3 percent to 56.49. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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