India’s Rupee Drops a Second Day as Infosys Cuts Export Forecast
India’s rupee weakened for a second day after the nation’s second-largest software exporter cut its sales forecast on slowing global growth.
Infosys Ltd. (INFO) today said sales in the year ending March 31, 2013, may be $7.34 billion, lower than the $7.55 billion forecast in April. South Korea lowered borrowing costs today for the first time in more than three years and Australian employers unexpectedly cut payrolls as Europe’s debt crisis damps growth in Asia. The currency briefly pared losses after a report showed India’s factory output in May rose more than economists estimated.
“Foreign investors will now look at what reforms will be announced to support growth and inflows,” said Paresh Nayar, head of money-market and currency trading at FirstRand Ltd. (FSR), a unit of South Africa’s second-largest trading group. The dollar- rupee pair will face resistance at 56, he said.
The rupee dropped 0.5 percent to 55.9250 per dollar in Mumbai, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 25 basis points, or 0.25 percentage point, to 12 percent.
Industrial production rose 2.4 percent in May from a year earlier, after a revised 0.9 percent contraction in April, the Central Statistical Office said in a statement in New Delhi today. The median of 35 estimates in a Bloomberg News survey was for a 1.8 percent advance.
Rate Cuts Delayed
Indications of better growth in India may delay further interest-rate cuts from its central bank, according to Credit Agricole CIB. The Reserve Bank of India, which next reviews policy on July 31, kept the benchmark repurchase rate unchanged at 8 percent in June after lowering it by 50 basis points in April. Wholesale prices rose 7.61 percent last month, according to another Bloomberg News survey before data due July 16, compared with 7.55 percent in May.
Three-month onshore rupee forwards traded at 56.82 per dollar, compared with 56.37 yesterday, and offshore non- deliverable contracts were at 56.82 from 56.33. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
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