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India’s rupee climbed to a one-week high on speculation the central bank will reduce borrowing costs to support growth amid signs of a recovery in the global economy.
Wholesale prices rose 7.37 percent in December from a year earlier, near the 10-month low of 7.24 percent in November, according to the median of 28 estimates in a Bloomberg survey before data due Jan. 14. The Reserve Bank of India will review interest rates on Jan. 29. China’s exports rose more than forecast last month, official data showed today, and Credit Agricole CIB predicts a slowdown in the pace of contraction of Indian shipments.
“India’s trade results should help support the rupee,” analysts at Credit Agricole, including Paris-based Sebastien Barbe, wrote in a research report today. An interest-rate cut would “boost sentiment,” they wrote.
The rupee advanced 0.3 percent to 54.5750 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 54.5656 earlier, the strongest since Jan. 3. The currency advanced for a third day and has gained 0.9 percent this week. One-month implied volatility in the rupee, a gauge of expected moves in exchange rates used to price options, rose nine basis points, or 0.09 percentage point, to 9.85 percent.
Over the past two days, Credit Agricole and Credit Suisse AG have recommended buying the rupee, saying interest-rate reductions and the government’s policy revamps will boost the currency.
Indian exports fell 4.2 percent in November, official data show, the seventh straight month of decreases. December data are due anytime in the coming five days.
Three-month onshore rupee forwards traded at 55.57 per dollar, compared with 55.82 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 55.57 versus 55.78. 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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