Indian rupee advanced to its highest level in a month following comments by Federal Reserve Chair Janet Yellen that the U.S. economy will still need further monetary stimulus to prop it up, while Chinese exports grew faster than expected.
The rupee was trading 0.1 percent higher at 60.06 per dollar in Mumbai, based on prices compiled by Bloomberg. The currency edged up roughly 0.4 percent to 59.9225, its highest level since April 19.
Yellen told a Joint Economic Committee of the Congress that the Fed will continue with its monetary stimulus program as the employment and inflation indicators are yet to hit its target. China’s exports in April surged 0.9 percent from a year ago after earlier declining for the preceding two months, removing investor anxiety about the possibility of a slowdown of the world’s second largest economy. Exports in March had declined 6.6 percent, which exceeded analyst’s expectation of a decline of 3 percent. Imports increased 0.8 percent, widening the trade surplus to $18.46 billion.
“Yellen’s dovish comments and an unexpected pickup in Chinese trade data have supported the rupee’s appreciation,” Vikas Babu, a currency trader at Andhra Bank in Mumbai told Bloomberg.
“Gains were limited as there were dollar bids from oil companies and other importers,” he said.
The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, fell 0.09 percentage point, or 9 basis points, to 11.2375 percent.
The commerce ministry of India is expected to release data on India’s exports and imports next week. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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