Rupee rises to two-week high on corporate inflow optimism

The currency climbed for a third day, strengthening 0.2% to 62.14 per dollar as of 10:07am in Mumbai, according to prices from local banks compiled by Bloomberg. Photo: Pradeep Gaur/Mint 

 

Mumbai: India’s rupee rose to a two-week high on speculation a mobile-phone spectrum auction and corporate buyouts will spur inflows.

 

The currency climbed for a third day, strengthening 0.2% to 62.14 per dollar as of 10:07am in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 62.07 earlier, the strongest level since 23 January.

 

Companies including Vodafone Group Plc accounted for around Rs.40,000 crore ($6.4 billion) of bids at the end of each day of the auction that began 3 February, according to government statements. The amount isn’t indicative of total inflows. India has also cleared the UK telecommunications company’s plan to buy out its local partners. Trade and inflation data due this week could hurt the rupee, according to Credit Agricole CIB.

 Risks of pressure on rupee assets prevail, although inflows related to M&A activity could provide a temporary respite, Dariusz Kowalczyk, a strategist at Credit Agricole in Hong Kong, wrote in a research report on Monday. The data will confirm the picture of weak fundamentals and an economy stuck at its bottom.

India’s industrial production probably contracted 1% in December after shrinking 2.1% in the previous 

month, according to the median of 21 estimates in a Bloomberg survey before a report due 12 February. Figures to be released the same day will show consumer prices rose 9.16% in January, compared with 9.87% in December, a separate survey shows. The trade data are due from on Monday.

 

Volatility, forwards

Credit Agricole expects a slowdown in exports and a widening of the trade deficit and high consumer-and producer- price inflation, although slightly lower than the previous month, Kowalczyck wrote in the report.

India’s cabinet cleared Vodafone to pay Rs.10,140 crore for the 15.5% of its local unit that it doesn’t control, information minister Manish Tewari said 6 February.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, rose 15 basis points, or 0.15 percentage point, to 9.41%.

Three-month offshore non-deliverable forwards fell 0.1% to 63.37 per dollar, data compiled by Bloomberg show. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. Bloomberg

 pratima kumari

pgdm 1st sem