India’s Rupee Climbs to One-Month High on Fed, China Trade Data

India’s rupee rose to a one-month high after Federal Reserve Chair Janet Yellen signaled the U.S. still needs monetary stimulus and China’s exports beat forecasts.

Yellen said yesterday in testimony to the Joint Economic Committee of Congress that a “high degree” of accommodation remains warranted and that the Fed must continue to spur economic growth as indicators for inflation and employment remain far from its goals. China’s overseas shipments rebounded in April after contracting for the previous two months, easing concern about a slowdown in Asia’s biggest economy.

“Yellen’s dovish comments and an unexpected pickup in Chinese trade data have supported the rupee’s appreciation,” said Vikas Babu, a Mumbai-based currency trader at Andhra Bank. Gains were limited as there were “dollar bids from oil companies and other importers,” he said.

India’s currency added 0.1 percent to 60.06 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It rose as much as 0.4 percent to 59.9225 earlier, the strongest since April 9.

China’s exports increased 0.9 percent in April from a year earlier, after falling 6.6 percent in March, official data showed today. That was more than the median estimate in a Bloomberg survey for a 3 percent drop. Imports gained 0.8 percent, leaving a trade surplus of $18.46 billion.

India’s commerce ministry will release data on April’s inward and outward shipments in the coming week.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, declined nine basis points, or 0.09 percentage point, to 11.2375 percent, according to data compiled by Bloomberg. That was an eighth straight day of declines.

Three-month offshore non-deliverable forwards on the rupee advanced 0.3 percent to 60.98 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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