India’s Rupee Strengthens on Current-Account, Export Optimism

India’s rupee approached a seven-week high on optimism falling oil and gold prices will help narrow a record current-account deficit.

Brent crude has slipped 11 percent this month, according to data compiled by Bloomberg, and that will help cut imports in a nation that gets about 80 percent of its oil from abroad. The price of gold, which the central bank estimates accounts for two-thirds of the current-account gap, fell 14 percent. India today extended assistance for exporters and said the trade deficit shrank in March, further benefiting the rupee.

“The possibility the current-account deficit might shrink is a major positive for the rupee,” said Sudarshan Bhatt, chief currency trader at state-run Corporation Bank in Mumbai.

The rupee advanced 0.4 percent to 53.9725 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 53.7725 yesterday, the strongest level since Feb. 28, and has gained 1 percent this week. The market will be shut tomorrow for a local holiday.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 29 basis points, or 0.29 percentage point, to 8.62 percent.

Export Outlook

Tata Consultancy Services Ltd., India’s largest software-services exporter, expects a “strong deal pipeline” with new business from all of its key markets to help boost sales this year, Chief Executive Officer N. Chandrasekaran said yesterday.

The company is “comfortable” with the rupee’s current level and is maintaining its strategy of hedging foreign-exchange exposure, Chief Financial Officer Rajesh Gopinathan said in an interview with Bloomberg TV India today.

India’s exports rose 7 percent from a year earlier to $30.8 billion and imports slid 2.9 percent to $41.2 billion, the Commerce Ministry said in a statement in New Delhi today. A policy giving subsidized credit to some exporters has been widened and rules for special economic zones eased, Commerce Minister Anand Sharma said at a briefing.

Three-month onshore rupee forwards traded at 55.09 per dollar, compared with 55.07 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were 54.82 versus 54.92. 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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