Rupee Trades Near Three-Week Low on Speculation RBI Intervened

India’s rupee ended within 0.2 percent of a three-week low on speculation the central bank intervened to rein in an advance that’s made the currency the best performing in Asia this year after Pakistan’s rupee.

India’s currency ended little changed at 59.3325 per dollar in Mumbai, after rising as much as 0.2 percent to 59.2275 during the day, according to prices from local banks compiled by Bloomberg. The rupee has appreciated 4.2 percent this year, compared with the 6.9 percent advance in Pakistan’s currency.

The Reserve Bank of India stepped up dollar purchases, according to Admisi Forex India Pvt. Foreign-exchange reserves in India have risen above $300 billion in 2014 for the first time since 2011 as the new government under Narendra Modi prepares to announce its inaugural budget next month, although an exact date hasn’t been formalized.

“The RBI is protecting the rupee from sharp gains to maintain India’s export competitiveness,” said Suresh Nair, a director at Admisi Forex India in Mumbai. “Investors now await the new government’s budget and policy announcements for cues.”

India’s rupee touched 59.4525 yesterday, the lowest level since May 15. The central bank bought dollars around 59.25 today, said four currency traders who asked not to be identified because the information isn’t public. The RBI has a policy of not commenting on day-to-day movements in the rupee.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, declined three basis points, or 0.03 percentage point, to 7.1875 percent, data compiled by Bloomberg show.

Three-month offshore non-deliverable forwards rose 0.1 percent to 60.16 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

Prime Minister Modi’s Bharatiya Janata Party secured India’s first single-party parliamentary majority since 1984 in national elections last month.

To contact the reporter on this story: Divya Patil in Mumbai at dpatil7@bloomberg.net

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

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