India’s Rupee Touches Highest Level since September on Election Bets

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India’s Rupee Touches Highest Level since September on Election BetsIndia’s rupee advanced the most since September this week after posting at least 2 percent growth over growing optimism that local poll results will announce a clear winner today, paving the way for economic stability.

The currency has appreciated 2.3 percent this week so far. It rose 1 percent on Friday to 58.685 in late morning trade in Mumbai. This makes it the strongest five-day gain since September 13. The currency also hit 58.62, a level last touched in June.

“Counting shows the BJP is poised for a majority win, which has boosted the rupee,” Manis Thanawala, a Mumbai-based director at Greenback Forex Services told Bloomberg. “The sharp surge in local stock indexes is also a positive for the rupee.”

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The main opposition party Bharatiya Janata Party and its partners appear to be grabbing 263 seats out of the 543 parliamentary seats available. 272 seats are required for majority winner. The election mood saw S&P BSE Sensex index of Indian stocks surge 5.2 percent, its strongest level in 5 years.

Traders also speculated that the Reserve Bank of India had fiddled with the forex market in order to limit rupee’s volatility and further gains. The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, declined 1.08 percent, or 108 basis points, to 8.94 percent.

The U.S. dollar was also trading lower at 101.385 yen, near the lowest level in two months of 101.31 yen that it hit yesterday, due to a decline in U.S. Treasury yields which fell to 2.473, a six-month low. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com