India’s Rupee Advances Most in a Week as Exporters Sell Dollars

India’s rupee rose the most in more than a week as exporters repatriated earnings to benefit from a more favorable exchange rate after the currency had the biggest decline in almost a month yesterday.

The rupee climbed 0.5 percent to 59.9375 per dollar in Mumbai, paring its weekly loss to 0.3 percent, according to prices from local banks compiled by Bloomberg. That’s the biggest gain since July 2. It fell 0.7 percent yesterday, the most since June 13.

The Indian currency also appreciated after new Finance Minister Arun Jaitley unveiled plans in the budget yesterday to allow more foreign investment and improve public finances, according to the Andhra Bank. India aims to raise a limit on automatically-approved foreign direct investment in the defense sector to 49 percent, from 26 percent, with anything more than that requiring special clearance, Jaitley said. The FDI cap for insurance would also be raised to 49 percent, he said.

“Exporters were seen selling dollars and that helped the rupee,” said Vikas Babu, a Mumbai-based foreign-exchange trader at state-owned Andhra Bank. “Allowing higher FDI will boost long-term inflows.”

Jaitley said the government will seek to cut the budget deficit to 4.1 percent of gross domestic product in the year through March 2015 from 4.5 percent in the previous period.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 19 basis points, or 0.19 percentage point, to 7.17 percent in Mumbai, according to data compiled by Bloomberg.

Three-month offshore non-deliverable forwards on the rupee fell 0.1 percent to 60.84 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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