By Anoop Agrawal Oct. 31 (Bloomberg) -- India's rupee rose as the benchmark stock index headed for its first weekly gain in more than a month, raising speculation investors will increase holdings. The rupee climbed 1 percent in the five days after falling for 11 straight weeks on signs the credit-market freeze is starting to unravel as central banks cut interest rates and pumped in funds to the banking system. The currency has rebounded from an all-time low reached on Oct. 27. ``Investors are of the view that the government is being more pro-active in bringing back investor confidence,'' said Amit Garg, a currency trader at state-owned Allahabad Bank in Mumbai. ``We are optimistic the rupee will rise in coming days.'' The rupee rose 0.5 percent to 49.455 per dollar as of 9:20 a.m. in Mumbai, from 49.675 on Oct. 29, according to data compiled by Bloomberg. Indian markets were closed yesterday for a holiday. The currency may appreciate to 49.25 in coming weeks, Garg said. The Bombay Stock Exchange Sensitive Index of stocks, or Sensex, gained 0.4 percent on Oct. 29, after surging 5.9 percent the previous day in a special one-hour trading session. The rupee has weakened more than 20 percent this year, the second-worst performer after the South Korea won of the 10 most- active Asian currencies, according to data compiled by Bloomberg. That was after funds based abroad sold a record $12.8 billion of local assets more than they bought this year. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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