India’s Rupee Rallies as Market Awaits Tomorrow’s Election Results

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India’s Rupee Rallies as Market Awaits Tomorrow’s Election Results Indian rupee surged its most in over nine months as traders expressed confidence that tomorrow’s federal election results will announce a clear winner, paving the way for economic stability.

The rupee surged 0.2 percent since Tuesday to trade at 59.55 a dollar in Mumbai morning trade. It edged up 0.4 percent higher to 59.46, its highest point since July 29. Local financial markets were closed down yesterday for a public holiday.

Six exit polls indicate that Bharatiya Janata Party may have won 249 out of 340 seats in the parliament. 279 seats are required for a clear majority. However, further rise in the rupee was weighed on by speculation that the central bank was purchasing dollars.

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“The currency advanced on the back of exit polls expectations that the BJP and its allies will win elections with a majority,” analysts at Angel Broking Ltd were quoted by Bloomberg as saying. “However, sharp upside in the currency will be capped or reversal can be seen due to dollar demand from oil importers and central bank.”

India’s wholesale-price inflation report is expected to be released later today by the Commerce Ministry.  Analysts expect the index to have gained 5.7 percent in April from a year ago. Official data released on Monday showed that consumer-price index surged to 8.59 percent in April from March’s 8.31 percent.

The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign value to options, fell 0.21 percentage point, or 21 basis points, to 10.18 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com