India’s rupee strengthened the most in almost a month after Federal Reserve Chair Janet Yellen pledged to keep interest rates low, supporting demand for emerging-market assets.
The Federal Open Market Committee said yesterday that U.S. borrowing costs are likely to stay low for a “considerable time” as it cut the bond-purchase program by another $10 billion to $35 billion.
“The FOMC statement on interest rates is clearly positive for the rupee,” said Ankur Jhaveri, co-head of currency and rates in Mumbai at brokerage Edelweiss Financial Services Ltd. “A stable and improving U.S. economy is good for India’s exports and inflows.”
The currency gained 0.5 percent to 60.0863 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. That’s the biggest gain since May 22. The rupee earlier gained as much as 0.9 percent in intraday trading.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, declined 83 basis points to 7.70 percent, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards declined 0.4 percent to 60.90 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 dollars.