Mumbai: The Indian rupee climbed to a two-month high on Wednesday as the benchmark stock index’s longest winning streak in more than a year fuelled optimism that global funds will increase purchases of local equities.
The currency advanced for a third day as data from the stock market regulator showed equity purchases by overseas funds exceeded sales for a fifth day. The Bombay Stock Exchange sensitive index, or Sensex, climbed for an eighth day, extending gains since the end of February to 27%.
The rupee’s movements are being driven by the positive sentiment in the equity markets, said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai. “I expect the present trend to continue in the short term.”
The local currency strengthened as much as 0.6% to 49.6075 a dollar, the highest since 19 February, before closing at 49.6600, according to data compiled by Bloomberg. It may rise to 49.50 in a few days, Paul forecast.
Indian stocks, laggards among the world’s biggest emerging market economies in the first quarter, recovered to post the steepest returns in the past month as investors snapped up the cheapest shares in 13 years.
BlackRock Inc., UBS AG and billionaire Wilbur Ross predict more gains as record low borrowing costs boost consumer spending in the world’s second most populous nation.
“We will be looking at more opportunities in India for sure, Ross, chairman of New York-based WL Ross and Co., said in an 8 April interview with Bloomberg Television. “Over a long period of time, it will be a very rewarding place, particularly since the market has come off so drastically.”
The Sensex has surged almost 40% from a three-year low hit on 9 March. The gain beat increases among benchmarks for Brazil, Russia and China.