Rupee Extends Gains on Bets Importers Will Slow Dollar Purchases

India’s rupee rose for a third day on speculation importers will reduce dollar purchases as trades won’t be settled today due to the central bank’s annual closing of accounts.

The currency extended its rebound from a record low of 60.7650 per dollar reached June 26. Investors will be watching U.S. jobs data due this week as they seek to gauge the timeline for a paring in U.S. stimulus measures, according to Andhra Bank Ltd. Non-farm payrolls grew by 165,000 workers in June, after gaining 175,000 in May, according to the median forecast of 70 economists surveyed by Bloomberg before figures due July 5.

“The currency should trade in a narrow range today as there aren’t any cues,” said Vikas Babu, a trader at state-run Andhra Bank (ANDB) in Mumbai. “The bias should be toward strengthening as oil-importers’ demand for dollars” should drop, he said.

The rupee advanced 0.2 percent to 59.2450 per dollar as of 10:12 a.m. in Mumbai, according to prices compiled by Bloomberg. The currency surged 1.4 percent on June 28, the biggest gain since September, paring last quarter’s drop to 8.6 percent, still the largest since the three months through end-September 2011.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 34 basis points, or 0.34 percentage point, today to 12.17 percent.

Jeremy Stein, a member of the Federal Reserve’s board of governors, said June 28 officials mulling when to start reducing the pace of bond purchases “in, say, September,” should take economic data since the start of the latest quantitative easing program into account, rather than just the most recent figures.

Three-month onshore rupee forwards rose 0.1 percent to 60.18 per dollar, according to data compiled by Bloomberg. Offshore non-deliverable contracts gained 0.7 percent to 60.25. 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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