Rupee Snaps 3-Day Gain on Concern Weak Monsoon Will Hurt Growth
India’s monsoon, which accounts for more than 70 percent of annual rains, was 17 percent below a 50-year average, the nation’s weather bureau said yesterday. Citigroup Inc. lowered its estimate for India’s growth in the fiscal year through March 2013 to 5.4 percent from 6.4 percent, and expects the pace will slow to 4.9 percent should weather conditions worsen, according to a report published today.
“The drought could lead to some near-term weakness” in the economy, said Nick Verdi, a strategist in Singapore at the investment banking unit of Barclays Plc. “This could affect inflows” of foreign capital, he said.
The rupee declined 0.6 percent to 55.4150 per dollar in Mumbai, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, rose five basis point, or 0.05 percentage point, to 10.40 percent.
Three-month onshore rupee forwards traded at 56.28 per dollar, compared with 56.13 yesterday, and offshore non- deliverable contracts were at 56.19 from 56.04. 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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