India’s rupee fell, erasing earlier gains, on speculation importers stepped up dollar purchases to benefit from the best exchange-rate in more than a week.
The currency had strengthened as much as 0.3 percent earlier as investors expect the European Central Bank to announce details of a new bond-purchase plan this week, spurring fund flows into emerging markets. ECB President Mario Draghi said in Brussels he would be comfortable buying bonds with maturities of up to about three years, Jean-Paul Gauzes, a member of the European Parliament, said yesterday. Policy makers at the ECB are scheduled to meet Sept. 6.
“Since the U.S. was shut yesterday for a holiday, there were limited dollar supplies,” said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “All the bids I saw today were from oil and gold importers.”
The rupee declined 0.2 percent to 55.6625 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 55.3750 earlier, the strongest level since Aug. 24. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 30 basis points, or 0.30 percentage point, to 9.50 percent, the lowest level since May 2.
Three-month onshore rupee forwards traded at 56.64 per dollar, compared with 56.55 yesterday, and offshore non- deliverable contracts were at 56.55 from 56.41. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
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