LM:Rupee falls from two-week high against dollar as manufacturing PMI drops
Mumbai: India’s rupee fell from the highest level in two weeks as a drop in a manufacturing gauge sparked concerns about growth in Asia’s third-largest economy.
A purchasing managers’ index released by HSBC Holdings Plc and Markit Economics was at 50.7 in December, lower than November’s 51.3. A figure above 50 indicates expansion. The Reserve Bank of India (RBI) raised its key interest rate twice last year to rein in the region’s fastest consumer-price gains.
“With monetary policy likely to remain tight and red tape continuing to stifle investment, we doubt growth in Indian manufacturing will accelerate sharply,” Krystal Tan, an economist at Capital Economics Ltd in Singapore, wrote in a research report on Thursday.
The rupee was down 0.3% to 62.06 per dollar in afternoon trade in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 61.7525 earlier, the strongest level since 17 December, on speculation foreign investors will add to the net $20 billion of Indian shares they bought last year.
The rupee fell as the S&P BSE Sensex index of shares erased gains. The benchmark dropped 1.19% after rising as much as 0.9% earlier. Foreign-exchange trading volumes are light due to holidays in several global markets on Thursday, according to India Forex Advisors Pvt. Ltd.
The rupee’s one-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose four basis points, or 0.04 percentage point, to 10.25%.
Three-month offshore non-deliverable forwards declined 0.3% to 63.31 per dollar, data compiled by Bloomberg show. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. BLOOMBERG
