India’s Rupee Retreats From 1-Month Low on Exporter Dollar Sales

India’s rupee rose, reversing earlier losses, on speculation exporters repatriated earnings to benefit from the exchange rate after the local currency approached a one-month low.

The rupee weakened beyond 61 per dollar level on April 23, the first time in a month amid importers’ dollar purchases and on concern China’s economic slowdown will damp investment inflows into the region. Global funds sold a net $1.5 billion of Indian bonds this month through April 23, the biggest outflow since October, the latest exchange data show. A lower rupee boosts the value of overseas earnings in local terms.

“The rupee advanced today as exporters sold the greenback from 60.08 levels and also as stop-losses were triggered,” said Amogh Moghe, a currency trader at Mecklai & Mecklai Ltd.

The currency gained 0.8 percent from April 23 to 60.6250 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. Financial markets in Mumbai were shut yesterday for parliamentary elections. The rupee touched 61.1925 on April 23, the lowest level since March 21. The currency lost 0.6 percent this week, the steepest loss since Jan. 24.

China’s Purchasing Managers’ Index for manufacturing was 48.3 in April, compared with 48 in March, according to a preliminary reading published by HSBC Holdings Plc and Markit Economics this week. A figure below 50 signals a contraction.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, declined five basis points, or 0.05 percentage points, to 12.1100 percent.

Three-month offshore non-deliverable forwards advanced 0.7 percent to 61.94 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in the greenback.

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