BLBG:India’s Rupee Has Monthly Loss as RBI Rolls Back Support Steps
India’s rupee completed its first monthly loss since August as policy makers wound down emergency measures taken to support the currency when it plummeted to an unprecedented low.
Oil importers, the nation’s largest purchasers of foreign exchange, are meeting most of their dollar needs in the local market, Reserve Bank of India Governor Raghuram Rajan said Nov. 13. The monetary authority’s offer of discounted swaps for foreign currency raised by banks is due to expire tomorrow, after attracting about $25 billion.
The rupee weakened 1.5 percent this month to 62.45 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The currency, which touched a record low of 68.8450 on Aug. 28, dropped 0.1 percent today, paring gains for the week to 0.7 percent.
“The swap window’s closing has put some pressure on the exchange rate but the measures have also helped the RBI garner resources to defend the currency if needed,” said Paresh Nayar, head of currency and money markets at FirstRand Ltd. in Mumbai. “For next month, the rupee is likely to take cues from the growth numbers tonight.”
Gross domestic product in Asia’s third-largest economy probably increased 4.6 percent from a year earlier in the three months ended Sept. 30, compared with a 4.4 percent gain in the previous quarter, according to the median of 44 estimates in a Bloomberg survey of economists before data due today.
Tapering, Volatility
Federal Reserve Bank of St. Louis President James Bullard said last week strong jobs data next month could boost the chances of the monetary authority tapering stimulus in December. The $85 billion of bond purchases boosted the flow of funds to emerging markets.
One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, jumped 263 basis points, or 2.63 percentage points, this month to 12.23 percent. The rate declined eight basis points today.
Three-month offshore non-deliverable rupee forwards fell 0.1 percent today to 63.99 per dollar, according to data compiled by Bloomberg. 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
