India’s rupee rose to the highest level in seven months before reports this week that economists predict will show slowing inflation.
Consumer prices probably rose 8.30 percent in February from a year earlier, according to the median of 39 estimates in a Bloomberg survey before data due March 12. January’s increase was 8.79 percent. Wholesale price gains slowed to 4.90 percent from 5.05 percent, another survey predicts. Data last week showed the current-account deficit shrank to a four-year low.
“These are still early signs of a recovery,” analysts at Religare Capital Markets Ltd., including Tirthankar Patnaik in Mumbai, wrote in a research report today. “Import revival and dollar strengthening from a potential U.S. recovery are likely to keep the rupee under pressure.”
The rupee rose 0.4 percent to 60.8425 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 60.79 earlier, the strongest level since Aug. 12. The Reserve Bank of India will keep the rupee from gaining much beyond 61.00, Credit Suisse Group AG predicts.
The U.S. reported better-than-estimated payroll figures on March 7, triggering concern the Federal Reserve will decide next week to further reduce monthly bond purchases to $55 billion. American employers added 175,000 jobs in February, the most in three months and higher than the 149,000 estimate in a Bloomberg survey.
One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, declined 23 basis points, or 0.23 percentage point, to 7.98 percent.
Three-month offshore non-deliverable forwards rose 0.4 percent to 62.04 per dollar, data compiled by Bloomberg show. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.