Mumbai: India’s rupee rose to the highest in more than nine years on optimism overseas fund managers will increase their holdings of local stocks to capitalize from the accelerating economy. The rupee rose for the fifth day, the longest winning streak in more than two months, as global funds more than doubled their purchases of Indian shares to $5.78 billion (Rs23,120 crore) this year to 2 July from a year earlier, according to the stock market regulator. That helped the benchmark stock index climb to the third straight record on Wednesday. “Overseas investors are optimistic about growth,” said M. Thiruvadi, chief currency trader at state-owned Indian Overseas Bank Ltd at Chennai.
Rupee rose 0.2% to 40.4475 against the dollar as of the 5pm close in Mumbai, according to data compiled by Bloomberg. That’s the highest since 11 May 1998.
The rupee also gained on optimism more overseas companies will make investments in the nation, requiring them to purchase the local currency.
Meanwhile, government bond prices continued to rule firm due to persistent demand from banks and corporates while call rates eased to 0.50% as against 1.25% on Tuesday due to ample liquidity in the system on the overnight call money market.