Thursday 24 July 2014

India’s Rupee Rises as Monsoon Revival Tempers Inflation

India’s rupee strengthened the most in more than a week as a pickup in seasonal rainfall tempered concern inflation will accelerate. The deficit in the June-September monsoon, which accounts for more than 70 percent of India’s annual rainfall, has narrowed to 27 percent of the 50-year average, the weather department said yesterday. The gap was 43 percent on July 11.

Gains in India’s consumer-price index slowed to 7.31 percent in June, the least since the gauge was introduced in January 2012. The rupee climbed 0.1 percent to 60.1875 per dollar as of
10:30 a.m. on 22nd of July in Mumbai. That’s the biggest gain since July 11. The yield on the 8.83% sovereign notes due November 2023 was little changed at 8.69 percent, according to the Reserve Bank of India’s trading system. That’s the lowest since July 4.

A revival in monsoon rains would be seen as a positive. The rupee is likely to remain range-bound as the RBI seeks to keep the currency stable. The rupee also gained amid increased capital inflows. Global investors have pumped more than $4 billion into the nation’s bonds and stocks this month as Prime Minister Narendra Modi’s government unveiled plans to narrow the budget deficit and allow more foreign investment in industries.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 27 basis points, or 0.27 percentage point, to 5.97 percent in Mumbai. Three-month offshore non-deliverable forwards on the rupee rose 0.1 percent to 60.94 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in the greenback.


0 comments:

Post a Comment