July 2 (Bloomberg) -- India’s rupee fell, reversing earlier gains, on speculation importers stepped up purchases of the dollar.
The currency rose as much as 0.6 percent today on optimism foreign funds would buy more Indian stocks. Provisional data from BSE Ltd. show overseas investors bought a net 11.2 billion rupees ($188 million) of equities on June 28, ending 13 straight days of outflows, after the government agreed to raise natural-gas prices to encourage exploration. This is part of a policy overhaul to revive an economy that grew at a decade-low rate of 5 percent in the year ended March 31.
“The drop in the rupee was largely due to importers’” purchases of dollars, said Ashtosh Raina, head of foreign-exchange trading at HDFC Bank Ltd. in Mumbai. “We saw some corporate inflows earlier.”
The rupee weakened 0.2 percent to 59.6650 per dollar in Mumbai, according to prices compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 15 basis points, or 0.15 percentage point, to 12.25 percent.
Three-month onshore rupee forwards fell 0.5 percent to 60.62 per dollar, according to data compiled by Bloomberg. Offshore non-deliverable contracts fell 0.4 percent to 60.72. 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 email@example.com
To contact the editor responsible for this story: James Regan at firstname.lastname@example.org