India Rupee Falls Toward Two-Week Low on Current-Account Concern

By Jeanette Rodrigues

India’s rupee fell toward a two-week low after the nation’s current-account deficit rose to a record in the fourth quarter.

The shortfall in the broadest measure of trade was $32.6 billion in the three months through December as imports of oil and gold surged, while export growth slowed, official data showed March 28. The government estimated Feb. 28 that Asia’s third-largest economy will need more than $75 billion of inflows in the year through March 2014 to fund the current-account gap.

The rupee fell 0.2 percent to 54.3600 per dollar as of 9:45 a.m. in Mumbai, data compiled by Bloomberg show. It touched 54.445 earlier, near the 54.565 level reached on March 20.

“A record current-account deficit continues to weigh on the Indian currency,” analysts at Edelweiss Financial Advisors Ltd., including Mumbai-based Vinay Khattar, wrote in a report today. Technical charts indicate the currency needs to move out of the 54 to 55 per dollar range to signal future direction, they wrote.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, was unchanged at 8.02 percent.

India removed all restrictions and sub-limits governing foreign funds’ purchases of rupee debt effective April 1, while keeping the overall cap at $25 billion for sovereign notes and $51 billion for securities issued by companies.

Three-month onshore rupee forwards traded at 55.44 per dollar, compared with 55.35 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 55.37 versus 55.28. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

To contact the reporter on this story: Jeanette Rodrigues in Mumbai atjrodrigues26@bloomberg.net

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