India’s Rupee Rises to 7-Month High Before Trade, Inflation Data

India’s rupee rose to the highest level in seven months on speculation slowing inflation and a narrowing current-account deficit will spur overseas purchases of the nation’s assets.

A government report this week may show the trade shortfall shrank to $9.4 billion in February from $9.9 billion in the previous month, according to a research note yesterday from Religare Capital Markets Ltd. Consumer-price gains probably eased to the lowest since January 2012, according to a Bloomberg survey of economists before data due tomorrow.

“The rupee will benefit from India’s improved trade data,” analysts at Credit Agricole CIB, including Dariusz Kowalczyk, wrote in a research report today. Technical charts indicate the “short-term outlook for the currency remains positive,” they wrote.

The rupee climbed 0.3 percent to 60.6850 per dollar as of 9:42 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 60.6038 earlier, the strongest level since Aug. 12. The currency has rebounded 13.4 percent from a record low of 68.845 on Aug. 28.

The shortfall in India’s current account, the broadest measure of trade, will be kept below $40 billion in the fiscal year that ends March 31, 2014, Finance Minister Palaniappan Chidambaram said in a March 7 briefing in New Delhi. The deficit was a record $88 billion in the previous 12 months.

Slowing Inflation

Consumer prices probably rose 8.30 percent in February from a year earlier, according to the median of 39 estimates in a Bloomberg survey. January’s increase was 8.79 percent. Wholesale-price gains slowed to 4.90 percent from 5.05 percent, another survey predicts before a March 14 report.

These are still early signs of an economic recovery, analysts at Religare Capital Markets, including Tirthankar Patnaik in Mumbai, wrote in yesterday’s report.

Industrial production probably contracted 1 percent in January after a 0.6 percent decrease the previous month, according to the median of 40 estimates in a separate Bloomberg survey before a report tomorrow.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, climbed 22 basis points, or 0.22 percentage point, to 8.19 percent, data compiled by Bloomberg show.

Three-month offshore non-deliverable forwards gained 0.6 percent to 61.67 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Andrew Janes

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