Rupee strengthens on G7 move

Mumbai India’s rupee advanced for a second day after the Group of Seven nations agreed to act together to tackle Europe’s debt crisis, spurring optimism about the global economic outlook. The G7 agreed on Tuesday to coordinate their response to Europe’s financial turmoil, which has tipped at least eight of the 17 euro-area economies into recession. US service industries expanded faster than economists expected in May, data showed, increasing demand for emerging-market assets. “The rupee is being boosted by a mildly positive global sentiment, which I think will be a temporary phenomenon,” said Naveen Raghuvanshi, a currency trader at Development Credit Bank Ltd. in Mumbai. “We are still seeing purchases of dollars by importers, so gains in the rupee are likely to be limited.” The rupee advanced 0.2 per cent to 55.5525 per dollar in Mumbai, according to data compiled by Bloomberg. The currency’s one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 12.9 per cent. The Institute for Supply Management’s index of US non-manufacturing businesses, which covers about 90 per cent of the country’s economy, unexpectedly increased to 53.7, topping the median projection of economists surveyed by Bloomberg for a reading of 53.4. Three-month onshore currency forwards traded at 56.35 a dollar, compared with 56.58 yesterday, and offshore non- deliverable contracts were at 56.65 from 56.73. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars. From gulfnews