Rupee Weakens Past 61 on Importers’ Dollar Demand, China Data

India’s rupee weakened past 61 per dollar for the first time in a month amid importers’ dollar purchases and on concern a decline in China’s factory output will damp demand for the region’s assets.

The rupee fell for a third day as exchange data showed foreign funds sold a net $1.5 billion of Indian bonds this month through yesterday. China’s Purchasing Managers’ Index for manufacturing was at 48.3 in April, compared with 48 in March, according to a preliminary reading published by HSBC Holdings Plc and Markit Economics today. A figure below 50 signals a contraction.

“Continued dollar demand from oil importers is weighing on the rupee,” said Vikas Babu, a Mumbai-based currency trader at Andhra Bank. “Weak economic data from China,” added to the rupee’s fall, he said.

The currency fell 0.5 percent to 61.0850 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 61.1925 earlier, the lowest level since March 21. The currency lost 1.3 percent this week. Financial markets in Mumbai are shut tomorrow for parliamentary elections.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, declined seven basis points, or 0.07 percentage point, to 12.2750 percent.

Three-month offshore non-deliverable forwards declined 0.5 percent to 62.32 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 greenback.

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