Indian Rupee to Gain Versus Rand, Omni Macro Fund’s Rosen Says

India’s rupee will strengthen against South Africa’s rand following the election of pro-business Prime Minister Narendra Modi, according to Omni Macro Fund Chief Investment Officer Stephen Rosen.

“We’ve remained and added to recently a long Indian rupee position after the election,” Rosen, who previously traded foreign-exchange at JPMorgan Chase & Co., said yesterday in a phone interview. Omni Partners LLP oversees $650 million and is based in London. “India continues to be a relatively stable economy, both from a trade deficit point of view and also from an inflation point of view.”

The rupee has rallied 7 percent against the rand this year, the biggest gain of its currencies 31 major counterparts. It has risen 4.2 percent versus the dollar, also the biggest increase.

The victory of Modi’s Bharatiya Janata Party stoked optimism that India will be able to take measures to cut its current-account deficit. The shortfall in the broadest measure of the country’s trade narrowed to $32.4 billion in the fiscal year ended March from an unprecedented $88 billion in the prior period.

Governor Raghuram Rajan kept the benchmark repurchase rate at 8 percent, the Reserve Bank of India said yesterday in a statement after raising the rate by 75 basis points since taking office in September to fight Asia’s fastest price gains. The RBI said further policy tightening won’t be warranted if consumer-price inflation stays on course to hit 8 percent in January 2015 and 6 percent a year later.

Rajan has used the stronger rupee to buy foreign currency, pushing reserves above $300 billion for the first time since 2011 and bolstering the nation’s defenses against speculators.

“There’s been quite a lot of differences in the policy responses of the various countries, and clearly the biggest change has been in India,” Chris Morrison, strategist for the Omni Macro Fund, said of emerging-market nations. Morrison previously worked on proprietary trading desks at JPMorgan and Royal Bank of Scotland Group Plc.

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