Nov. 7 (Bloomberg) -- India’s rupee rose the most in more than two weeks as Barack Obama was re-elected as U.S. president, a result that makes further monetary easing in the world’s largest economy more likely.
Obama defeated Republican Mitt Romney, who had said he wouldn’t reappoint Federal Reserve Chairman Ben S. Bernanke. The monetary authority announced in September it would buy bonds to spur growth. The Dollar Index, which tracks the greenback against six major trading partners, fell as much as 0.4 percent. The rupee’s gains will be limited after the Reserve Bank of India refrained from cutting borrowing costs last month, according to Westpac Banking Corp.
“The thinking is that Obama as president would mean a dovish Fed, which puts the dollar on the back foot,” said Jonathan Cavenagh, a currency strategist at Westpac in Singapore. “Investors are still wary of the rupee as they are disappointed by the lack of growth-support measures.”
The rupee advanced 0.4 percent to 54.2150 per dollar in Mumbai, the biggest gain since Oct. 22, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 10 basis points, or 0.10 percentage point, to 10.30 percent.
The RBI kept its benchmark repurchase rate at 8 percent on Oct. 30, citing price pressures. It also cut its growth forecast for the year through March to 5.8 percent from 6.5 percent and raised its inflation estimate to 7.5 percent from 7 percent.
Three-month onshore rupee forwards were at 54.97 per dollar, compared with 55.32 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 54.96 versus 55.36. 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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