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Rupee gains on US jobs data

Rise in hiring numbers boosts sentiment for emerging market assets

Gulf News

New Delhi: India’s rupee rose the most in more than a week after US jobs data beat economists’ forecasts in July, helping boost sentiment for emerging-market assets.

Employment in the world’s largest economy increased 163,000, exceeding the median estimate for a 100,000 gain in a Bloomberg News survey, a government report showed on August 3. Appreciation in the rupee will be limited by concerns about India’s growth and inflation, according to Alpari Financial Services India Ltd.

“The sharp rise in the US nonfarm payrolls number has boosted risk-on trade,” Pramit Brahmbhatt, Mumbai-based chief executive officer at the Indian unit of Alpari Financial Services, wrote in an emailed response to questions today. “Weak domestic fundamentals shall limit the rupee’s gains.”

The currency rose 0.4 per cent to 55.5225 per dollar in Mumbai, the biggest advance since July 26, according to data compiled by Bloomberg. It touched 55.2350 earlier, the strongest level since July 30. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 11.30 per cent.

The Reserve Bank of India kept its benchmark repurchase rate at 8 per cent on July 31. It raised the inflation forecast for the year through March 2013 to 7 per cent from 6.5 per cent and lowered the economic growth estimate to 6.5 per cent from 7.3 per cent. The People’s Bank of China said on its website yesterday it would increase the intensity of policy fine-tuning and continue exchange-rate reforms.

‘Regain Confidence’

Palaniappan Chidambaram, making his first statement after being named India’s finance minister last week, said today that he will seek fiscal consolidation and work to revive investment.

“The economy is challenged by a number of factors,” Chidambaram said at a briefing in New Delhi today. “With sound policies, good governance and effective implementation, we would be able to overcome these challenges. Uppermost in my mind is the duty to regain the confidence of all stakeholders.”

Three-month onshore rupee forwards traded at 56.47 per dollar, compared with 56.76 on August 3, and offshore non-deliverable contracts were at 56.45 from 56.77. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.