Bloomberg News

Indian Rupee Rebounds From One-Week Low as Exporters Sell Dollar

November 02, 2011

Nov. 2 (Bloomberg) -- India’s rupee rose, rebounding from a one-week low, on speculation exporters repatriated their overseas income to take advantage of a favorable exchange rate.

The currency gained for the fifth time in six days as the Dollar Index, which tracks the greenback against six major trading partners, snapped a three-day gain. The rupee fell earlier to the lowest level since Oct. 25 on concern Europe’s debt crisis will hurt demand for emerging-market goods and financial assets. A weaker rupee boosts the value of export earnings in local-currency terms.

“The rupee’s early weakness probably prompted some exporters to sell dollars,” said Roy Paul, a deputy general manager at Federal Bank Ltd. in Mumbai in charge of foreign- exchange and fixed-income trading. “Broad dollar weakness also supported the local currency.”

The rupee advanced 0.2 percent to 49.1875 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 49.4125 earlier, the weakest level since Oct. 25. The currency will appreciate to 47.50 in three months, Goldman Sachs Group Inc. predicts.

Offshore forwards indicate the rupee will trade at 49.99 to the dollar in three months, compared with expectations for a rate of 50.04 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

--Editor: Anil Varma

To contact the reporters on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net; V Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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