March 18 (Bloomberg) -- India’s rupee rose to a one-week high on speculation easing inflation will spur overseas purchases of the nation’s assets even as the U.S. keeps cutting its record monetary stimulus.
Wholesale-price gains slowed to a nine-month low in February and consumer prices climbed by the least in two years, official data showed last week. The BSE S&P Sensex index of shares advanced to an all-time high. Bunched up inflows due to a local holiday yesterday will boost the rupee, as will easing geopolitical tensions after the Crimea referendum, according to Andhra Bank.
“The momentum has been positive for the rupee amid good data,” said Vikas Babu, a trader at state-run Andhra in Mumbai. “I expect a status quo at the Indian central bank’s policy review on April 1 after the recent rate hikes.”
The rupee appreciated 0.5 percent from March 14 to 60.9150 per dollar as of 10:13 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 60.8675 earlier, the strongest level since March 11.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 11 basis points, or 0.11 percentage point, to 8.86 percent.
Elections to be held in April and May could be a catalyst for policies to revive economic growth, Goldman Sachs Group Inc. analysts including Sunil Koul wrote in a March 14 report. The bank raised India to overweight from market weight.
The U.S. Federal Open Market Committee will further scale back its bond-buying program when its meeting concludes tomorrow, reducing purchases by $10 billion to $55 billion, according to economists surveyed by Bloomberg on March 14-17. Policy makers will scrap a 6.5 percent unemployment-rate target in favor of a range of economic indicators, 76 percent of the economists said.
Indian wholesale prices rose 4.68 percent in February from a year earlier, data showed March 14, below the median estimate in a Bloomberg survey of 45 analysts for a 4.9 percent increase. Consumer-price inflation slowed to 8.1 percent that month and industrial production expanded 0.1 percent in January, according to separate reports.
Global funds bought a net $730 million of Indian shares and $1.6 billion of rupee-denominated debt this month through March 13, exchange data show. Reserve Bank of India Governor Raghuram Rajan raised the benchmark repurchase rate in January to 8 percent, the third increase since September.
The U.S. and European Union imposed limited sanctions on some people linked to Russian efforts to annex Crimea, the Ukrainian territory that voted to join Russia in a disputed referendum at the weekend.
Three-month offshore non-deliverable forwards rose 0.5 percent to 62.13 per dollar. 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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