The rupee snapped a three-day drop on speculation Unilever Plc will bring in capital to complete a $5.4 billion open offer to boost ownership of its Indian unit.
The world’s second-biggest consumer goods company said last month it received the local regulator’s approval for an offer to raise its stake in Hindustan Unilever Ltd. (HUVR) to 75 percent from 52.5 percent. The Indian currency also advanced as dollar outflows slowed because of today’s U.S. Independence Day holiday, according to state-owned Corporation Bank.
“Today is the last day for the Unilever open offer, so that money also comes in,” said Vikas Babu, a foreign-exchange trader at state-owned Andhra Bank (ANDB) in Mumbai.
The rupee advanced 0.3 percent to 60.0575 per dollar as of 10:37 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. The currency, which fell to an unprecedented 60.7650 on June 26, will trade mostly between 59.90 and 60.30 today, according to Sudarshan Bhatt, chief currency trader in Mumbai at state-run Corporation Bank.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 25 basis points, or 0.25 percentage point, to 13.17 percent.
“The rupee will stay in a range because of the U.S. holiday,” Corporation Bank’s Bhatt said. “If we see further gains in the rupee, oil importers will come in” to benefit from the exchange rate, he said.
Three-month onshore rupee forwards rose 0.5 percent to 60.99 per dollar, according to data compiled by Bloomberg. Offshore non-deliverable contracts gained 0.4 percent to 61.09. 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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