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India’s Rupee Trades Near a Two-Month Low on Policy Concern

November 22, 2012

India’s rupee traded near a two- month low before the government seeks lawmakers’ approval for policy changes announced this quarter in the winter session of parliament that begins today.

Prime Minister Manmohan Singh needs legislators’ support for plans to allow more foreign investment in pension and insurance industries. Opposition parties are threatening a no- confidence vote over an earlier move to allow international supermarket chains to hold a majority stake in retail outlets.

Fluctuations in the rupee will be “contingent upon further reforms, implementation of announced reforms and the broad Dollar Index,” strategists at Citigroup Inc., including Singapore-based Gaurav Garg, wrote in a report received today. “With the ruling coalition reduced to minority status in both houses of parliament, the market is suspicious of the outcome.”

The rupee slipped to 55.1450 per dollar as of 10:37 a.m. in Mumbai, from 55.1250 yesterday, according to data compiled by Bloomberg. It touched 55.3750 yesterday, the weakest level since Sept. 13, when the government began announcing measures to improve public finances and attract investment.

One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 9.75 percent.

The rupee rose earlier after U.S. data added to speculation a recovery in the world’s largest economy is gathering momentum. Jobless claims fell by 41,000 to 410,000 last week, Labor Department data showed yesterday.

Three-month onshore rupee forwards were at 55.95 per dollar, compared with 55.99 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 56.01 versus 55.98. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at

To contact the editor responsible for this story: Amit Prakash at

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