MUMBAI: India's rupee completed its biggest weekly drop in more than a month on concern stalled US budget talks will damp demand for riskier assets.
The rupee declined 1.1 per cent this week to 55.07 per dollar in Mumbai, the biggest drop since the five days through November 9, according to data. The currency fell 0.4 per cent yesterday and has lost 3.6 per cent this year after plunging 16 per cent in 2011.
One-month implied volatility, a gauge of expected moves in exchange rates used to price options, rose five basis points, or 0.05 percentage point, from December 14 to 10.10 per cent. The rate, which fell 10 basis points yesterday, has dropped 190 basis points in 2012.
House Republican leaders cancelled a planned vote on Thursday on Speaker John Boehner's plan to allow higher tax rates on annual incomes of more than $1 million, as lawmakers seek to avert more than $600 billion in automatic spending cuts and tax increases that are set to start in January. India's central bank refrained from lowering interest rates at a December 18 review. The rupee is affected by an uncertain US budgetary deal.
which is less than two weeks away from its deadline,"Pramit Brahmbhatt, Mumbai-based chief executive at Alpari Financial Services India, wrote in an e-mail yesterday. "The month-end and quarter-end importer demand for dollars continues to weigh" on the currency, he said.
Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.