India’s Rupee Slides on Dollar Demand, Aussie Drops before Key US Economic Data

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India’s Rupee Slides on Dollar Demand, Aussie Drops before Key US Economic DataThe India’s rupee posted its biggest drop in over a week on the basis that importers purchased more dollars in order to meet their month-end obligations. The currency fell 0.1 percent to trade at 60.1850 per dollar at 9:46 a.m. local time. This was the steepest decline since July 18.

“Month-end dollar demand from oil importers is impacting the rupee,” Naveen Raghuvanshi, a currency trader at DCB Bank Ltd in Mumbai, told Bloomberg. “The rupee also weakened on account of dollar strength ahead of the Fed policy review.”

The rupee lost ground after a key dollar index- – the Bloomberg Dollar Index- – rose to its highest level in eight weeks on Tuesday. Analysts surveyed by Bloomberg expect the Federal Reserve to reduce its monthly asset-purchase program by a further $10 billion, from $35 billion to $25 billion when it concludes its monthly policy meeting today. This sets it on the path to wrap up the program before the end of 2014.

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The rupee’s 3-month offshore non-deliverable forwards declined 0.2 percent to 60.87 per dollar. The currency’s one-month implied volatility, which measures the projected swings in the exchange rate used to assign price to options, increased 0.19 percentage point, or 19 basis points, to 5.49 percent.

Meanwhile, the Australian dollar fell in late Wednesday trading in Sydney as the market awaited data on U.S. economic health that is due to be released today. As of 5 p.m., the Aussie traded at US 93.73 cents, much weaker than US93.96 cents at the same time on Tuesday. The currency touched a high of US93.90 cents and a trough of US93.72 cents during Wednesday’s session.

The Fed is also widely expected to reduce the monthly bond-purchases by $10 billion. The US gross domestic product report for the second quarter is also expected to be published today. 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