India’s rupee rose for a second day as Asian currencies and stocks rallied on speculation the U.S. bailout of Citigroup Inc. enticed investors back to emerging- market assets.
The currency strengthened by the most in three weeks after the U.S. government announced guarantees to rescue Citigroup, sending the MSCI Asia-Pacific Index of regional shares up 2.2 percent. Record sales of Indian equities by overseas investors this year made the rupee the third-worst performing currency in Asia excluding Japan.
“There is a lot of optimism investors are drawing from the efforts authorities across the globe are making to tide over the crisis,” said Vikas Babu, a foreign-exchange trader at state- owned Andhra Bank in Mumbai. “The rupee should continue to benefit along with other Indian assets.”
The rupee gained 0.5 percent to 49.8225 per dollar as of 9:21 a.m. in Mumbai, according to data compiled by Bloomberg. It may rise to 48 in a few weeks, Babu said.
Funds based abroad sold $13.5 billion more Indian equities than they bought this year, data from the Securities and Exchange Board of India show.
Citigroup received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week. It will also get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program.
Source : Bloomberg.com