India’s rupee gained the most in over four months as weak U.S. retail sales data spurred bets the Federal Reserve will delay an increase in interest rates.
Sales at retailers were little changed in April, compared with a forecast for a 0.2 percent gain in a Bloomberg survey of economists, official figures showed on Wednesday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, dropped for a third day. Higher U.S. rates will reduce the allure of emerging-market assets.
The rupee gained 0.6 percent to close at 63.6550 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. This is the biggest gain since January 9. Indian sovereign bonds rose for the first time in three days.
“The economic data coming out of the U.S. don’t seem to support the case for an immediate increase in rates,” said Sajal Gupta, head of foreign exchange and rates at Edelweiss Securities Ltd. in Mumbai. A rate increase looks more probable in December rather than previous estimates of an earlier raise, he said.
U.S. economic indicators have missed expectations since January, according to an index by Citigroup Inc. that measures data surprises relative to market expectations, suggesting the Fed isn’t getting any closer to raising rates. The rupee plummeted to an unprecedented 68.845 to a dollar in August 2013 after the Fed’s signal to withdraw its monetary stimulus saw an exodus of funds from emerging markets.
The yield on the 8.4 percent Indian government notes due July 2024 fell two basis points, or 0.02 percentage point, to 7.94 percent, according to prices from the Reserve Bank of India’s trading system.