India’s Rupee Declines Most in Two Weeks as Importers Buy Dollar

India’s rupee fell the most in more than two weeks on speculation oil refiners stepped up dollar purchases for crude shipments from abroad.

The currency dropped 0.5 percent to 60.0150 per dollar at the close in Mumbai, according to prices from local banks compiled by Bloomberg. That’s the biggest loss since June 18.

The rupee also weakened amid concern inadequate seasonal rainfall will hurt farm output and delay a recovery in Asia’s third-largest economy. The monsoon, which accounts for more than 70 percent of India’s annual rainfall, was 43 percent lower than the 50-year average since June 1, according to the weather department. Prime Minister Narendra Modi’s government will unveil its first budget on July 10.

“It seems that there is dollar demand from oil companies and that is pressurizing the rupee,” said Naveen Raghuvanshi, a Mumbai-based currency trader at DCB Bank Ltd. “A bad monsoon could also be a concern. The rupee is expected to trade in a narrow range from 59.75 to 59.95 ahead of the budget.”

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined four basis points, or 0.04 percentage point, to 7.20 percent in Mumbai, according to data compiled by Bloomberg.

Three-month offshore non-deliverable contracts fell 0.4 percent to 60.75 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

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