Mumbai: India's rupee retreated from the highest level in 11 weeks on speculation importers boosted dollar purchases before a US market holiday Monday. The Asian currency was also pressured due to concerns about Europe's economy, according to Development Credit Bank Ltd. European finance ministers meet in Brussels to discuss tackling their region's debt crisis.
The rupee had strengthened earlier on optimism investors will step up purchases of the nation's assets as policy makers boost efforts to spur economic growth and improve public finances. "Because of the US holiday, there is concern that we may have insufficient inflows or even outflows tomorrow," said Naveen Raghuvanshi, a trader at Development Credit Bank in Mumbai. "That affected the rupee."
The rupee declined 0.1 per cent to 53.7550 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 53.6350 earlier, the strongest level since November 2. One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, rose 20 basis points, or 0.20 percentage point, to 10.35 per cent.
The Reserve Bank of India will lower its repurchase rate to 7.75 per cent from 8 per cent at a January 29 review to support Asia's third-largest economy, according to 11 of 14 analysts in a Bloomberg survey.