New Delhi: The rupee gained the most in almost three weeks on Monday, erasing last week’s losses, on speculation that a rising benchmark stock index will attract overseas investors.
The currency advanced for the second day after a report on 11 May had showed that industrial output growth exceeded 10% for the fifth month. Production at factories, utilities and mines unexpectedly accelerated 12.9% in March, the Central Statistical Organization said in New Delhi.
“The overall trend for the rupee is to get firmer,” said L.V. Prasad, chief currency trader at IndusInd Bank Ltd in Mumbai. “Stocks are looking bullish again and we can expect more funds to come in from overseas. The dollar supply position is looking very comfortable,” he added.
The rupee rose 0.9% to 40.88 against the dollar at the 5pm close of trading in Mumbai, after dropping almost 1% last week, the biggest loss since May 2006.
The benchmark Bombay Stock Exchange’s sensitive index, or Sensex, on Monday climbed 1.2%, the most since 3 May, after the State Bank of India (SBI), the nation’s biggest lender, had on 12 May reported a profit that exceeded analysts’ expectations.
Net income at SBI in the quarter through 31 March surged 75% to Rs1,493 crore, compared with the median Rs1,087 crore predicted by five analysts in a Bloomberg survey.
Higher earnings at companies are luring global funds to Asia’s fourth-biggest economy. They bought $1.5 billion (Rs6,150 crore) more of Indian shares than they sold in April, the second-highest month this year, according to data provided by the stock market regulator Securities & Exchange Board of India.
The $854 billion economy probably expanded 9.2% in the financial year ended 31 March, according to government estimates, the fastest pace in almost two decades. The Sensex has risen almost 7% since 1 April.
The rupee is the third-best performer in the world this year, having risen almost 8%, according to Bloomberg data.