India’s rupee completed a fourth weekly decline, the longest losing streak since April, on concern a jump in international oil prices will widen the nation’s trade deficit and add to inflation.
Brent crude climbed to $115.71 per barrel yesterday, the highest since September, as the violence in Iraq fanned concern that supplies will be disrupted. India’s trade shortfall reached $11.2 billion, the most in 10 months, and wholesale-price inflation reached this year’s fastest pace of 6.01 percent in May, reports showed this month.
The rupee “remains hostage to the geopolitical tensions in the Middle East,” said Anindya Banerjee, a currency analyst at Kotak Securities Ltd. in Mumbai. “It’s expected to remain volatile in the near term.”
The currency declined 0.7 percent this week and 0.2 percent today to 60.1875 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The rupee touched 60.54 on June 18, the weakest since April 29.
One month implied volatility, a gauge of expected moves in the exchange rate used to price options, jumped 76 basis points, or 0.76 percentage point, from June 13 to 7.71 percent, according to data compiled by Bloomberg. That’s the biggest increase since the week ended April 18.
Three-month offshore non-deliverable forwards on the rupee fell 0.3 percent today and 0.8 percent from a week ago to 61.07 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.