June 8 (Bloomberg) -- India’s rupee completed its first weekly gain since March, snapping the longest losing streak since 2008, on speculation the central bank will lower borrowing costs this month to spur economic growth.
The Reserve Bank of India has more room to cut interest rates after economic growth slowed and oil prices dropped, Deputy Governor Subir Gokarn said this week. On June 6, Prime Minister Manmohan Singh pledged measures to revive economic growth, echoing similar statements from global policy makers. China cut rates yesterday for the first time since 2008.
“A rate cut will benefit the rupee as the currency needs a strong growth outlook and lower rates will work towards boosting domestic consumption,” said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong. “We expect the repurchase rate to be cut by 25 basis points at the June 18 review.”
The rupee advanced 0.2 percent to 55.4550 per dollar in Mumbai, the first advance since the five days ended March 30, according to data compiled by Bloomberg. It fell 0.9 percent today. The currency’s one-month implied volatility, a measure of exchange-rate swings used to price options, rose five basis points, or 0.05 percentage point, to 11.7 percent. The gauge dropped 170 basis points this week.
India’s gross domestic product rose 5.3 percent last quarter from a year earlier, the least since 2003, government data showed last week. Brent crude oil has dropped 21 percent this quarter to $97.47 per barrel. India imports about 80 percent of its oil.
Three-month onshore currency forwards traded at 56.41 a dollar, compared with 56.02 yesterday, and offshore non-deliverable contracts were at 56.58 from 56.15. 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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