India Rupee Holds Near Two-Month High Before Fed Policy Meeting

India’s rupee held near its highest level since November before the start of the U.S. Federal Reserve’s two-day policy meeting today.

Some 45 percent of 53 economists in a Bloomberg News survey forecast the central bank will raise the benchmark lending rate in June. Six percent said July, while 30 percent said the Fed will wait until September for the first increase since 2006. Fed officials last month said they expect to lift the rate this year. Indian government bonds were steady today.

The rupee was little changed from Jan. 23 at 61.4125 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. The currency, which has climbed 2.7 percent this year in Asia’s best performance, reached 61.3675 on Jan. 23, the highest level since Nov. 5.

“Investors are a bit cautious ahead of the Fed meeting,” said Arnab Sardar, a currency trader at Dhanlaxmi Bank Ltd. in Mumbai. “Even though things are progressing well on India’s domestic front, there’s concern that there may be some outflows when the U.S. starts raising rates.”

Three-month offshore non-deliverable forwards fell 0.1 percent to 62.22 rupees a dollar. Local markets were shut yesterday for a public holiday.

The policy-setting Federal Open Market Committee meets on Tuesday and Wednesday in Washington. Foreign funds, which bought a record $42 billion of Indian stocks and bonds in 2014, have added another $4.2 billion to their holdings so far this year, the latest exchange data show. The rupee has been spurred by overseas inflows and optimism that the plunge in oil prices will help improve India’s current-account deficit.

The yield on the local sovereign bonds due July 2024 was little changed at 7.70 percent, prices from the Reserve Bank of India’s trading system show. The rate slumped to 7.69 percent on Jan. 21, the lowest close for benchmark 10-year debt since July 2013.

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