Rupee rises to six-week high as stocks attract more investors

Rupee rises to six-week high as stocks attract more investors

Mumbai: The rupee advanced to the strongest closing level in six weeks on optimism foreigners will pour more money into India’s shares, lured by the economy’s relatively fast growth.

Overseas investors bought $555 million (Rs2,675 crore) more Indian equities than they sold on 17 September, the most in two months and a ninth straight day of net purchases, according to latest figures from the stock exchange. Gross domestic product rose 6.1% from a year earlier in the three months through June, a pace of expansion second only to China among regional economies.

“The rupee may extend its advance as capital inflows into the financial markets have increased and the economic outlook has improved," said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai.

The rupee gained 0.4% to 47.97 per dollar at close in Mumbai, from 48.14 at the end of last week, according to data compiled by Bloomberg. Local financial markets were closed on Monday on account of Id-ul-Fitr.

Offshore contracts indicate bets the rupee will trade at 48.03 to the dollar in a month, compared with expectations of 48.29 at the end of last week. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.

Funds based abroad have bought Indian equities worth a net $9.75 billion this year, taking their holdings to $65 billion, according to the Securities and Exchange Board of India.