India’s rupee rose to the highest level in more than two weeks on speculation foreign funds will step up purchases of the nation’s shares after Group of 20 officials endorsed parts of a plan to contain Europe’s crisis.
The currency and the BSE India Sensitive Index of equities advanced for a second day after European Union Economic and Monetary Affairs Commissioner Olli Rehn said clarity on a plan to stem the region’s debt problems will emerge in the “coming days.” Overseas investors bought a net $362 million of Indian stocks last week to Oct. 13, exchange data show, the biggest increase in holdings since the seven days to Sept. 2.
“The rupee is benefiting from expectations of inflows into stocks since the news from Europe has helped sentiment,” said Kamlakar Rao, Mumbai-based head of foreign-exchange trading at state-run Allahabad Bank.
The rupee gained 0.2 percent to 48.9325 per dollar as of 9:37 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 48.8550 earlier, the highest level since Sept. 28.
G-20 finance ministers and central bank officials reached some agreement during weekend talks in Paris on how to avoid a Greek default, bolster banks and curb the contagion. They set an Oct. 23 summit of European leaders in Brussels as the deadline for the final plan to delivered.
Offshore forwards indicate the rupee will trade at 49.62 to the dollar in three months, compared with expectations for a rate of 49.69 on Oct. 14. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
Source : bloomberg.com