Rupee strengthened for a second day on hopes that the exporters will take advantage of a three-week run of losses to repatriate overseas income.
Rupee strengthened for a second day on hopes that the exporters will take advantage of a three-week run of losses to repatriate overseas income.
The rupee advanced 0.1% to 51.66 a dollar as of 10:07 a.m. It lost 5.8% in the last three weeks and touched an all-time low of 52.185 on March 3. The rupee has tumbled 21% in the past year.
The dollar’s risk-reversal rate against the rupee, the premium on call options over put options, fell to a three-week low, showing demand dropped for contracts that allow purchases of the U.S. currency. A call option grants the holder the right to buy an asset. The one-month 25-delta risk-reversal rate fell to 2.25%, the lowest since Feb. 17. It reached 3.5% on Feb. 27, the most since Jan. 14.
The rupee also climbed as offshore forwards contracts showed traders pared bets for further weakness in rupee. Options contracts indicated demand for dollar
purchases eased.
Offshore contracts indicate traders bet the rupee will trade at 51.90 per dollar in a month, compared with expectations of 52.05 on March 6. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than rupee.
