BLBG:Rupee Set For Best Week Since July On Optimism Of Deficit Curbs
India’s rupee headed for its biggest weekly gain since July on optimism the nation’s new finance minister will announce measures to narrow the budget deficit and attract investment.
Palaniappan Chidambaram, in his first speech after taking office, said Aug. 6 that he will unveil steps for fiscal consolidation and clarify tax laws. Disinvestment Secretary Mohammad Haleem Khan said Aug. 8 the government may start its asset-sale program next month to increase revenue. The currency was also boosted by speculation that global central banks will take steps such as debt purchases to spur growth.
“A lot in India’s trajectory will depend on how the new finance minister will improve investors’ confidence,” Sergey Dergachev, who helps manage $8.5 billion in emerging-market funds at Union Investment Privatfonds in Frankfurt, said in an e-mail. “I see some scope for improvement.”
The rupee advanced 0.6 percent this week to 55.4500 per dollar as of 10:03 a.m. in Mumbai, the biggest gain since the five days through July 13, according to data compiled by Bloomberg. It fell 0.3 percent today. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 10.20 percent. The guage fell 110 basis points, or 1.10 percentage point, this week.
German Chancellor Angela Merkel backed the European Central Bank’s bond-buying plan, her spokesman Georg Streiter said Aug. 6. The rupee pared the week’s gain today after a government report yesterday showed the nation’s industrial production in June unexpectedly contracted 1.8 percent from a year earlier, adding to signs of faltering growth in Asia’s third-largest economy.
Three-month onshore rupee forwards traded at 56.34 per dollar, compared with 56.33 yesterday, and offshore non- deliverable contracts were at 56.17 from 56.25. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
