The India’s rupee extended its losses for the third day on bets the central bank had intervened in currency markets to ensure the stronger currency won’t weigh on economic revival.
The rupee fell after earlier advancing up to 0.2 percent on speculation state-owned banks may have intervened on the Reserve Bank of India’s behalf by purchasing dollars. The currency remained slightly unchanged at 60.5275 per dollar at the close of trading in Mumbai.
The rupee’s one-month implied volatility, which measures the expected swings in the exchange rate used to assign price to options, plunged 0.08 percentage point or eight basis points, to 6.35 percent.
An official report released last week indicated that gross domestic product in the second quarter grew the most in two years, pushing stocks up 0.9 percent. The economy rose 5.7 percent in the first three months of the fiscal year starting April 1, the strongest performance since the quarter through March 2012, reported the nation’s Central Statistical Office on Aug. 29.
“The rupee gained earlier on the back of stronger GDP data and surge in equities,” Pramod Patil, a Mumbai-based trader at United Overseas Bank, told Bloomberg News. “It lost gains as the RBI may have intervened to keep the currency stable and protect the economy”.
The central bank announced on Monday that the country’s current-account deficit declined to $7.8 billion in the quarter to June, compared with $21.8 billion a year earlier. However, the gap expanded from $1.2 billion in the first quarter.
Foreign funds bought a net $4 billion of Indian stocks and bonds in the month through August 27, exchange data showed.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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