Rupee Declines as Investors Lured to Cheapest Dollar in 2 WeeksJeanette Rodrigues
India’s rupee fell, reversing gains after rising to the highest level in almost two weeks, on speculation investors and importers bought the dollar to benefit from the exchange rate.
State-run banks were seen buying dollars around the 59 per dollar level, said J. Moses Harding, executive vice president at IndusInd Bank Ltd. in Mumbai. Investors will be watching U.S. jobs data due this week as they seek to gauge the timeline for a paring in U.S. stimulus measures, he said. Non-farm payrolls grew by 165,000 workers in June, after gaining 175,000 in May, according to the median forecast of 70 economists surveyed by Bloomberg before figures due July 5.
“Exporters sold dollars in early trade and then we saw some importers step in to buy dollars later in the day,” Harding said. “The RBI needs to buy dollars too to replenish reserves, and anything stronger than 59 would be a good level to do that.”
The rupee declined 0.2 percent to 59.5225 per dollar in Mumbai, according to prices compiled by Bloomberg. It touched 58.9650 earlier, the strongest level since June 19, rebounding from an all-time low of 60.7650 touched June 26. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 42 basis points, or 0.42 percentage point, today to 12.09 percent.
Jeremy Stein, a member of the Federal Reserve’s board of governors, said June 28 officials mulling to start reducing the pace of bond purchases “in, say, September,” should take economic data since the start of the latest quantitative easing program into account, rather than just the most recent figures.
Three-month onshore rupee forwards fell 0.2 percent to 60.34 per dollar, according to data compiled by Bloomberg. Offshore non-deliverable contracts gained 0.4 percent to 60.45. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.