Spanish Prime Minister Mariano Rajoy is struggling to impose austerity and restore confidence amid calls for him to resign on corruption allegations, while Italian polls showed Silvio Berlusconi has closed the gap on his rival even as he appeals a four-year prison sentence for tax fraud. Overseas investors have bought $4.6 billion more Indian shares than they sold this year, exchange data show, and the rupee will advance over the next few weeks as the buying continues, according to Westpac Banking Corp.
“The wobbles in Europe are a timely reminder that the region is not out of the woods just yet,” said Jonathan Cavenagh, a currency strategist at Westpac in Singapore. “That’s weighing on sentiment in Asia today.”
The rupee declined 0.1 percent to 53.3350 per dollar as of 9:48 a.m. in Mumbai, according to data compiled by Bloomberg. The currency touched 52.9150 yesterday, the strongest level since Oct. 18. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell one basis point, or 0.01 percentage point, to 9.74 percent.
The European Central Bank meets on Feb. 7, while euro-area leaders gather for a summit the same day. The European Union accounted for 17.2 percent of India’s exports in the six months through September 2011, according to the latest data available from the commerce ministry.
Three-month onshore rupee forwards traded at 54.33 per dollar, compared with 54.22 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 54.14 versus 54.05. 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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