Bloomberg News
India's rupee traded within 0.3 percent of an 11-month high on optimism the nation's new government will step up efforts to revive the economy.
Narendra Modi will be sworn in as India's prime minister today after his Bharatiya Janata Party won national elections with the first single-party majority since 1984. The Reserve Bank of India may buy dollars to shore up foreign reserves and to curb exchange-rate volatility, capping rupee gains, analysts including Mumbai-based Vikas Khemani at brokerage Edelweiss Securities Ltd. wrote in a research report today.
'The overall optimism that inflows will continue after the strong election results is boosting the rupee,' said Naveen Raghuvanshi, a Mumbai-based currency trader at DCB Bank Ltd. 'Hopes that there'll be more reforms announced by the new government, especially in the financial sector, are supporting the currency's appreciation.'
The Indian currency traded at 58.4975 per dollar as of 10:15 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 58.3350 on May 23, the strongest level since June 2013, and has gained 3.2 percent this month in the best exchange-rate performance in Asia.
The BJP won 282 of 543 parliamentary seats, more than the 272 needed to form a government on its own, according to poll results published May 16. Foreign funds bought a net $4.3 billion of local stocks and bonds this month through May 22, the latest exchange data show.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 14 basis points, or 0.14 percentage point, to 7.63 percent, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards declined 0.2 percent to 59.27 per dollar, according to data compiled by Bloomberg. 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: Divya Patil in Mumbai at dpatil7@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Anil Varma, Robin Ganguly
Posted by Unknown on Sunday, May 25, 2014 - Rating: 4.5
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