Dec. 23 India’s rupee weakened for a second day on speculation local importers will step up dollar purchases to settle month-end bills after the greenback touched a 15-week high against a basket of major currencies.
The rupee has declined 0.8 percent so far this month, set for the first monthly loss since August, as the Dollar Index, which the ICE uses to track the greenback against the currencies of six major U.S. trading partners, gained 4.5 percent this month. India’s trade deficit widened to $8.8 billion in October, the most in 11 months, as imports grew faster than exports.
“The rupee has weakened because the dollar’s strength is fueling some demand for it,” said J. Moses Harding, executive vice president at IndusInd Bank Ltd. Still, “the overall picture looks positive for the rupee as economic fundamentals remain strong.”
The rupee declined 0.1 percent to 46.8725 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The currency has advanced 3.9 percent this year.
Offshore contracts indicate bets the rupee will trade at 46.94 per dollar in a month, compared with expectations for a rate of 46.84 yesterday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non- deliverable contracts are settled in dollars rather than the local currency.
Source : bloomberg.com