USD/INR Climbs As U.S. Economy Shows Signs of Strength

India’s rupee completed its biggest weekly decline since August on speculation an improving U.S. economy will strengthen the dollar and damp demand for emerging-market assets.

U.S. retail sales climbed the most in eight months in November, data showed yesterday, adding to signs of a pickup in the world’s largest economy as the Federal Reserve considers its first interest-rate increase since 2006. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose 0.6 percent yesterday, the most in almost a week. Indian sovereign bonds capped a fourth weekly gain.

“The revival in the U.S. economy should further strengthen the dollar,” said Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services Ltd. in Mumbai. “Year-end and quarter-end dollar demand is expected to put pressure on the rupee going forward.”

The rupee weakened 0.8 percent from Dec. 5 to close at 62.30 a dollar in Mumbai. The currency touched 62.5038 earlier, the lowest level since Feb. 6. Its weekly drop is the biggest since the five days ended Aug. 1. It rose 0.1 percent today.

Three-month offshore non-deliverable forwards fell 0.7 percent from Dec. 5 to 63.19 a dollar, data compiled by Bloomberg show. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. They gained less than 0.1 percent today.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza