India’s rupee declined from the highest level in more than three months on speculation importers stepped up dollar purchases to benefit from the exchange rate.
The currency had strengthened earlier on optimism the nation’s largest state asset sale in a year will attract foreign capital. Ministers approved an offering of government shares worth 120 billion rupees ($2.3 billion) in NTPC Ltd., India’s biggest power producer, Disinvestment Secretary Ravi Mathur said in New Delhi yesterday. The sale will open tomorrow, he said. Global funds poured $4.7 billion into Indian stocks this year, exchange data show.
“Inflows will continue,” said Vikas Babu, a foreign-exchange trader in Mumbai at the state-owned lender. “The currency could strengthen more in the coming weeks, though we will see importers coming in and buying dollars.”
The rupee declined 0.1 percent to 53.1650 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 52.8900 earlier, the strongest level since Oct. 17. One-month implied volatility, a gauge of expected exchange-rate swings used to price options, rose 11 basis points, or 0.11 percentage point, to 9.58 percent.
India plans to offer shares in four more state companies by March 31, including Steel Authority of India Ltd. and National Aluminium Co. The government raised 31.4 billion rupees last week by selling 10 percent in the explorer Oil India Ltd.
Three-month onshore rupee forwards traded at 54.20 per dollar, compared with 54.13 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 54.05 versus 53.97. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.