Volatility in India’s rupee rose from a two-week low after Federal Reserve Chair Janet Yellen refrained from giving a clear indication on when U.S. interest rates would be raised and as tension in Ukraine increased.
Slack remains in the U.S. labor market, though borrowing costs could be raised sooner than expected, Yellen said in Jackson Hole, Wyoming on Aug. 22. Ukraine announced an increase in military spending before preliminary peace talks with Russian President Vladimir Putin tomorrow as the conflict with pro-Russian rebels showed no signs of abating.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.1 percentage point, to 6.90 percent as of 10 a.m. in Mumbai. The measure touched 6.77 percent on Aug. 22, the lowest since Aug. 6. The rupee was little changed at 60.46 per dollar following three weeks of gains,
Efforts to cut the budget deficit are positive for India’s credit ranking, Agost Benard, Standard & Poor’s associate director of sovereign ratings inSingapore, said in an Aug. 22 interview. Finance Minister Arun Jaitley aims to reduce the shortfall to 4.1 percent of gross domestic product in the year through March 2015, which would be the least since 2008, according to estimates released last month.
Three-month offshore non-deliverable forwards fell 0.1 percent today to 61.33 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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