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India’s One-Month Rupee Forwards Strengthen From Record Low

India’s one-month rupee forwards strengthened, rallying from last week’s record low, after a Chinese manufacturing index rose and the price of oil dropped.

One-month offshore non-deliverable contracts advanced 1.6 percent to 67.26 per dollar as of 9:18 a.m. in Singapore, data compiled by Bloomberg show. The contracts gained as much as 2.5 percent earlier after touching 70.05 on Aug. 29. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

The Bloomberg-JPMorgan Asia Dollar Index advanced for a fourth day after official data yesterday showed a manufacturing gauge in China climbed to a 16-month high in August. India’s economy grew 4.4 percent in the three months to June from a year earlier, the weakest pace since 2009, the government reported on Aug. 30. The price of oil fell for a third day, reducing the nation’s import costs.

“We’ve seen a little bit of improvement in emerging Asian currencies generally on the back of better-than-expected China PMI reading,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore. “It’s probably still too early to draw a conclusion from the NDF trading in the Indian rupee. Liquidity is thin.”

SGX CNX Nifty Index futures for September delivery were unchanged at 5,445 in Singapore trading. The underlying CNX Nifty Index rose 1.2 percent to 5,471.80 on Aug. 30.

Brent crude fell 1 percent to $112.93 a barrel today after dropping 2.2 percent in the previous two days, according to data compiled by Bloomberg.

Rupee Rebounds

The rupee plunged 8.1 percent last month in its worst performance since 1992 on concern India’s deepening economic slowdown will deter investors as the U.S. prepares to pare stimulus. The currency climbed 4.8 percent in the last two trading days, the biggest two-day advance since September 2011, after the central bank said on Aug. 28 that it will supply dollars directly to local oil importers.

Raghuram Rajan, an economist credited with predicting the 2008 global financial crisis, will take charge of India’s central bank on Sept. 5.

“As Rajan will assume the governorship of the RBI this coming Thursday, the bearish sentiment toward the Indian rupee will be kept in check, also taking into account the foreign-exchange swap window introduced last week,” Anthony Lam, a Credit Agricole CIB analyst in Hong Kong, wrote in a research note today.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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