Rupee Drops to One-Month Low on Importers' Dollar Purchases, Fedby
India's foreign-exchange reserves increase to a record
Oil importers seen buying greenback to pay month-end bills
India’s rupee fell to the lowest level in almost a month on speculation importers are stepping up dollar purchases to pay bills.
Most Asian emerging-market currencies and equities retreated Monday ahead of policy decisions this week from the Federal Reserve and the Bank of Japan. India’s foreign-exchange reserves surged to a record, suggesting the nation’s central bank is boosting defenses should an increase in U.S. interest rates and rebounding oil prices spur currency volatility.
The rupee weakened 0.2 percent in a third day of declines to 66.6175 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. It fell to 66.7550 earlier, the lowest level since March 28. The currency has dropped 0.6 percent this month after rallying 3.3 percent in March, the most since September 2013.
“The rupee’s strength was seen as overdone and has presented an opportunity for oil importers to buy dollars,” said Subramanian Sharma, director at Mumbai-based Greenback Forex Services Pvt. “A rise in forex reserves is an indication that the Reserve Bank of India won’t allow significant appreciation in the rupee.”
The currency hoard grew by $334 million in the week to April 15 to an unprecedented $360.3 billion, RBI data showed after the close of markets on Friday. Greenback Forex estimates the rupee to trade in a range of 66.25-66.80 a dollar this week.
While economists expect U.S. policy makers to keep rates unchanged when they end a two-day meeting on Wednesday, a slim majority of analysts project the Japanese central bank will boost monetary stimulus at its meeting the following day.
The yield on Indian sovereign bonds due January 2026 rose two basis points to 7.47 percent, according to prices from the RBI’s trading system. India will auction 48.2 billion rupees ($723.5 million) of debt quotas to foreign investors later on Monday, enabling them to buy government securities.