Mumbai: The rupee rose for a second day on Thursday as a rally in local shares added to speculation global investors will increase holdings of the nation’s assets to benefit from its economic growth.
The rupee erased earlier losses of as much as 0.8% after the Bombay Stock Exchange’s sensitive index advanced 1.3%, extending Wednesday’s 3.8% gain. Offshore funds have bought Indian equities worth $3.5 billion (Rs16,730 crore) more than they sold this month, according to the capital markets regulator. The currency also gained on speculation some exporters converted their overseas earnings into rupees.
“The outlook for the rupee is quite positive as the stock market is showing a lot of resilience, attracting capital inflows,” said Sanjay Arya, treasurer at Bank of Maharashtra in Mumbai. India’s growth prospects remain relatively strong. Some corporate dollar sales too helped the rupee strengthen. It gained 0.1% to 47.6525 per dollar, according to data compiled by Bloomberg.
It fell as low as 48.09 earlier, the weakest since 18 May, on speculation rising bond yields in the US will increase borrowing costs and thwart the Federal Reserve’s efforts to reduce consumer rates, stimulate demand and revive the world’s biggest economy.