Rupee Halts Losses on Strong Chinese Manufacturing Report

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Rupee Halts Losses on Strong Chinese Manufacturing ReportThe Indian rupee rebounded after China’s manufacturing sector showed signs of recovery in May, easing worries that investors may offload Asian assets.

The rupee edged up 0.3 percent to trade at 58.5950 per dollar in mid-morning trade in Mumbai. Foreign investors purchased a net $3.9 billion worth of local stocks and bonds in the week ending May 20. Global investors rushed to buy local bonds and stocks after the main opposition party Bharatiya Janata Party won majority seats in the parliament.

The BJP clinched 282 of 543 seats available in the Indian parliament, which was way past the 272 seats required to create a government.

China’s flash purchasing managers’ index (PMI) rose to 49.7 this month, the most in five months, up from the 48.1 in April. The index, which is published by Markit Economics and HSBC Holdings, beat the average forecast of 48.3 in a Bloomberg survey.

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“The currency has advanced on the back of Chinese data and also as we are seeing good buying in local stocks and debt by foreign institutional investors,” Paresh Nayar, a Mumbai-based head of currency and money markets at FirstRand Ltd. “The continued euphoria of a majority win by a single party in India is also benefiting the rupee.”

The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, fell 0.14 percentage point, or 14 basis points, to 7.88 percent.

In a separate report, the ruble continued with its advances for the fifth straight day, nearly touching the highest level in four months. This prompted the Banco Rossii to stop intervening in the currency market. The ruble was up by 0.2 percent at 39.9555 against the central bank’s dollar-euro basket in late morning trading in Moscow. 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