July 4 (Bloomberg) -- The rupee snapped a three-day drop on speculation that Unilever Plc brought in capital to complete a $5.4 billion open offer to boost ownership of its Indian unit.
The world’s second-biggest consumer goods company said last month it received the local regulator’s approval for an offer to raise its stake in Hindustan Unilever Ltd. to 75 percent from 52.5 percent. The Indian currency also advanced as dollar outflows slowed because of today’s U.S. Independence Day holiday, according to state-owned Corporation Bank.
“Today is the last day for the Unilever open offer, so that money also comes in,” said Vikas Babu, a foreign-exchange trader at state-owned Andhra Bank in Mumbai.
The rupee advanced 0.2 percent to 60.1300 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The currency fell to an unprecedented 60.7650 on June 26. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 27 basis points, or 0.27 percentage point, to 12.65 percent.
The rupee swung between gains and losses in intraday trading after Reserve Bank of India Governor Duvvuri Subbarao reiterated the central bank intervenes in the foreign-exchange market only to smooth volatility and the authority has no exchange-rate target or band. Importers also bought dollars, according to Ashtosh Raina, head of foreign-exchange trading at HDFC Bank Ltd. in Mumbai.
Three-month onshore rupee forwards rose 0.2 percent to 61.19 per dollar, according to data compiled by Bloomberg. Offshore non-deliverable contracts gained 0.3 percent to 61.17. 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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