Rupee surges on foreign investment

Rupee surges on foreign investment

Mumbai: The rupee rose, adding to its first monthly gain since May, after foreign investors increased holdings of Indian shares to a record.

The currency climbed to its strongest level in eight weeks after overseas funds bought more Indian equities than they sold for a 15th straight day on 29 September, the longest stretch in almost two months.

Foreign investment in the stock market reached an all-time high of $67.3 billion (Rs3.2 trillion) on 29 September, data from the Securities and Exchange Board of India showed.

“The latest figures for foreign portfolio inflows remain impressive and rupee is gaining from the expectation that the trend will continue," said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai.

The rupee rose to 47.755 per dollar at close in Mumbai, from 48.11 on 29 September, according to data compiled by Bloomberg. It touched 47.7025 earlier, the strongest level since 10 August. Currency and bond markets in Mumbai were shut on Wednesday for banks’ half-yearly accounts closing.

The rupee, which gained 1.8% last month, may trade between 47.75 and 48.10 in the coming days, Paul said. Offshore contracts indicate bets the rupee will trade at 47.81 to the dollar in a month, compared with expectations of 48.07 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.

Growth in Asia’s third largest economy accelerated to 6.1% in the quarter ended 30 June, a pace that’s second only to China in Asia.