The Indian rupee appeared set to post its second weekly advance as investors speculated that the country will vote in a government that will turn around its dim economic fortunes.
The rupee was up 0.2 percent at 60.0725 per dollar in mid-morning trading in Mumbai. The currency rose to 59.9225 on Thursday, its strongest point since April 9.
The largest opposition party Bharatiya Janata Party looks set to win as it’s the leader of the recent opinion polls. Most Indians are looking to oust the ruling Congress Party, whose reign has been marred by corruption scandals and decline in economic growth. Election results will be revealed on May 16.
“The market is gearing up for the election outcome and is looking forward to next week’s exit polls, which will give an indication of final results,” Amogh Moghe, a foreign-exchange trader at Mecklai & Mecklai Ltd in Mumbai told Bloomberg. “If the results are as per the opinion polls, then the rupee could appreciate to 59.25.”
The rupee has also benefited partly from Federal Reserve Chair Janet Yellen’s comments that the U.S. economy still needs stimulus as employment and inflation indicators still fall short of its targets. The Fed has been slashing its monthly asset-purchase program; it slashed it by $10 billion to $45 billion this month. Its active presence in the U.S. bond market has caused investors to scamper for emerging-economy assets.
The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate that is used to assign prices to options, fell 0.09 percentage point, or nine basis points, to 11.15 percent on Friday. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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