India’s rupee rose by the most in two weeks on speculation the main opposition party will win national elections and unveil policies to spur economic growth.
The Bharatiya Janata Party and its allies probably won 249 to 340 seats, according to six exit polls, with 272 needed for a majority. The Indian currency pared gains on speculation the Reserve Bank of India bought the greenback to contain volatility in the exchange rate, according to five traders, who asked not to be identified as the information isn’t public.
The rupee gained 0.6 percent, the most since April 25, to 59.67 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The S&P BSE Sensex of local shares rose to a record. The rupee touched 59.5175 yesterday, the strongest since July.
“The rupee is buoyed by the outcome of the exit polls,” said Paresh Nayar, head of currency and money markets in Mumbai at FirstRand Ltd. “The jump in stocks is also aiding it.”
Voting in the world’s biggest election ever was completed yesterday and results will be announced on May 16. Exit polls indicate the ruling Congress party and its allies probably won 70 to 148 seats as voters seek to punish them for corruption scandals and the slowest growth in a decade.
One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, declined 84 basis points, or 0.84 percentage point, to 10.8950 percent, according to data compiled by Bloomberg. That’s the lowest since April 15.
Three-month offshore non-deliverable forwards on the rupee gained 0.1 percent to 60.78 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 U.S. currency.