India’s rupee completed its biggest weekly gain in a month on speculation exporters repatriated overseas income to benefit from a more favorable exchange rate.
Local companies may have stepped up dollar sales after the rupee weakened 0.7 percent in April, the steepest slide since January, according to Mecklai & Mecklai Ltd. The rupee also advanced after the Federal Reserve reinforced its commitment this week to record-low borrowing costs.
“Exporters are selling dollars heavily,” said Amogh Moghe, a Mumbai-based currency trader at Mecklai & Mecklai. “The Fed’s assurance that key rates will be kept at zero also aided the currency’s appreciation” as traders look to U.S. jobs data due later today, he said.
The rupee rose 0.8 percent this week to 60.1625 per dollar in Mumbai and climbed 0.3 percent from April 30, according to prices from local banks compiled by Bloomberg. It was the biggest weekly advance since March 28. Indian financial markets were shut yesterday for a public holiday.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 15 basis points, or 0.15 percentage point, today to 11.8475 percent. It declined 27 basis points this week.
The U.S. Labor Department may report today that nonfarm payrolls increased by 218,000 in April, up from 192,000 the previous month, according to the median estimate of economists in a Bloomberg survey.
The Fed cut its monthly bond-buying program by a further $10 billion this week to $45 billion and said more reductions in “measured steps” are likely. It said in a statement on April 30 that it will keep the benchmark rate close to zero for a “considerable time” after its bond-purchasing program ends.
Three-month offshore non-deliverable forwards on the rupee rose 1.1 percent this week to 61.25 per dollar, according to data compiled by Bloomberg. The contracts advanced 0.2 percent today. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in the greenback.