Jan. 28 (Bloomberg) -- India’s rupee strengthened for a second day on speculation exporters were taking advantage of recent weakness in the currency to bring overseas income home.
A drop in the rupee, which has weakened versus the dollar in four of the last five weeks, boosts the local-currency value of companies’ overseas income. The Indian currency also gained as offshore non-deliverable forward contracts showed traders reduced bets for how far the rupee will decline in a month.
“The rupee is not able to form a firm weakening trend, which is prompting exporters to convert some of their overseas receivables,” said Amit Garg, a currency trader at state-owned Allahabad Bank in Mumbai. “There appear no reasons why the currency should weaken from here on.”
The rupee climbed 0.2 percent to 48.83 per dollar as of 10 a.m. in Mumbai, according to data compiled by Bloomberg. It reached a record low of 50.615 on Dec. 2.
Non-deliverable forward contracts showed traders reduced bets for further weakness in the rupee. Offshore contracts indicate the rupee may trade at 49.01 to the dollar in a month, compared with expectations for 49.34 a week ago.
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