India’s Rupee Gains to One-Week High on Exporter Dollar Sales

India’s rupee rose to the highest level in more than a week on speculation exporters took advantage of the currency’s recent decline to repatriate overseas income at a more favorable exchange rate.

Local companies may have stepped up dollar sales to benefit from the Indian currency’s 0.9 percent drop against the dollar this month, according to Greenback Forex Services Pvt. A weaker rupee boosts the value of foreign earnings in local-currency terms. Traders are wary of taking major positions before a Federal Reserve meeting tomorrow, when the U.S. central bank will probably cut monthly bond purchases by $10 billion to $45 billion, according to a Bloomberg Survey.

“These are attractive levels for exporters to sell dollars,” said Subramanian Sharma, a director at Greenback Forex Services in Mumbai. “Market players are likely to be cautious and avoid big bets ahead of the Fed’s meeting.”

The rupee rose 0.4 percent to 60.4250 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It gained as far as 60.37 earlier, the highest since April 21. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell eight basis points, or 0.08 percentage point, to 12.15 percent.

The yield on India’s 8.83 percent sovereign bonds due November 2023 fell two basis points to 8.83 percent, prices from the central bank’s trading system show. One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, dropped four basis points to 8.59 percent.

Three-month offshore non-deliverable forwards on the rupee advanced 0.3 percent to 61.61 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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