Rupee gains as stocks advance most in more than 3 weeks

Rupee gains as stocks advance most in more than 3 weeks

Mumbai: The rupee rose, ending two days of losses, as a rally in the benchmark share index stoked optimism overseas investors will buy more local equities.

The currency traded near the highest in almost a decade as the Bombay Stock Exchange’s Sensitive Index, or Sensex, gained the most in more than three weeks. Purchases of local shares by funds based abroad more than doubled this year from 2006, according to the Securities & Exchange Board of India.

“The overall view is that global investors are confident of India’s strong growth," said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank Ltd. in Mumbai. “That should keep the rupee in an appreciation mode."

The rupee rose 0.3% to 39.305 per dollar at the close in Mumbai, according to data compiled by Bloomberg. Its 12.5% advance this year is the second best performance by an Asian currency after the Philippine peso.

The median forecast of 24 economists in a Bloomberg News survey predicts the rupee will rise to 39.21 by year-end and 39 by the end of March 2008. The Sensex climbed 4.7% on Wednesday, the most since 23 October.

The index is headed for a sixth annual gain as stock purchases by global funds have reached a record $16.8 billion (Rs66,024 crore) this year, compared with $8 billion in 2006.