India’s rupee advanced by the fastest pace in three weeks after US employers absorbed fewer workers than projected in July, dampening expectations that the Federal Reserve may hike interest rates soon.
The rupee rallied 0.4 percent to trade at 60.9350 per dollar in Bombay, the strongest advance since July 11. The currency fell 1 percent last Friday, the most in six months, on fears that financial turmoil in Argentina and Portugal may weigh on inflows to emerging markets.
Nonfarm payrolls in US increased by 209,000 workers last month, compared with 298,000 in June, reported the Labor Department on August 1.
“U.S. non-farm payrolls numbers, which were not upbeat, have become an excuse for leaving dollar longs and that has spilled over into Asian markets,” Anindya Banerjee, a Mumbai-based currency analyst at Kotak Securities Ltd., told Bloomberg.
The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate relied on for pricing options, fell 0.09 percentage point or nine basis points, to 6.99 percent. The three-month offshore non-deliverable forwards, which are usually settled in US dollars, plunged 0.2 percent to steady at 61.99 per dollar.
Meanwhile, the Polish zloty also rode on the weak US labor report to advance the most in nearly a month. The currency, which has lost 0.4 percent of its value this quarter, gained 0.3 percent to trade at 4.1704 versus the euro as of 4:35 p.m. in Warsaw financial market.
The zloty recently took a hit after Poland’s July Purchasing Managers’ Index fell to 49.4 compared with 50.3 in June. The reading was under 50, indicating contraction. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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