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.
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