India Rupee Falls on Intervention Speculation as Importers Sell

India’s rupee retreated from a three-week high on speculation the central bank sought to curb gains and importers boosted dollar purchases.

Demand for the greenback from local importers increased after the currency strengthened as much as 0.3 percent earlier, according to Edelweiss Financial Services Ltd. State-run lenders probably bought the U.S. currency on behalf of the Reserve Bank of India from the 59.56 level, four Mumbai-based traders said, asking not to be named because the information isn’t public.

“The rupee lost gains as importers including oil companies purchased dollars,” said Ankur Jhaveri, co-head of currency and rates in Mumbai at brokerage Edelweiss Financial Services. “Gains in the rupee were limited as the RBI was seen intervening to prevent any significant appreciation.”

India’s currency fell 0.1 percent to 59.7463 per dollar at the close in in Mumbai, according to data from local banks compiled by Bloomberg. The rupee earlier climbed as high as 59.5337, the strongest level since June 13. It rose 0.6 percent yesterday, the most in more than six weeks.

The currency strengthened earlier as exchange data showed global funds bought a net $375.4 million of Indian stocks on July 1, the biggest purchases since June 12. Capital inflows have quickened amid optimism the new government led by Prime Minister Narendra Modi will unveil measures to revive growth in the July 10 budget.

One-month implied volatility in the rupee, a gauge of expected swings in the exchange rate used to price options, fell four basis point, or 0.04 percentage point, to 7.29 percent, data compiled by Bloomberg show.

Three-month offshore non-deliverable forwards fell 0.1 percent to 60.54 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in the U.S. currency.

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