By Anoop Agrawal Dec. 5 (Bloomberg) -- India’s rupee ended a three-week slide on speculation government spending to bolster the economy will prompt overseas funds to resume purchase of local assets. The currency rose for a fourth day as CNBC-TV18 channel reported that the government will unveil a stimulus package tomorrow. The central bank said Governor Duvvuri Subbarao will address the press in Mumbai at noon tomorrow, spurring speculation policy makers will announce measures to avert a slowdown after a report last week showed the economy expanded at the slowest pace since 2004. “Investors are appearing to be more confident about the investment climate improving,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “That is helping local assets including the currency.” The rupee rose 1 percent this week to 49.60 a dollar, according to data compiled by Bloomberg. Overseas funds bought $111.1 million more Indian shares than they sold on Dec. 4, the most since Nov. 3, according to the latest data from the Securities & Exchange Board of India. India’s foreign-exchange reserves rose for the first time in 10 weeks, indicating the central bank didn’t sell dollars, data from the monetary authority showed today. India’s currency is poised to recover from a 21 percent decline this year as the outlook for economic growth overpowers concern over last week’s terrorist attacks in Mumbai, Aberdeen Asset Management Ltd. and F&C Management Ltd. said. Growth Prospects The currency has rebounded almost 2 percent from a record low. The International Monetary Fund predicts India will expand 6.3 percent next year, the fastest pace after China among the world’s 20 biggest economies. “If you look around the world, which economy can offer growth rates of at least 5 to 6 percent?” said Jeffrey Chowdhry, who manages $2 billion as head of emerging-market equities in London at F&C, a unit of U.K. insurer Friends Provident Plc. “You can count them with fingers on one hand and India is one of them. We were ready to take advantage of any panic, but there wasn’t any.” The rupee may climb to 48 by June 30, according to the median forecast by 22 analysts in a Bloomberg survey. Trading in interest-rate swaps showed traders are betting the central bank will reduce benchmark borrowing costs further. The cost to receive floating-rate payments for five years is 1.48 percentage points below similar-maturity government bond yields, indicating interest rates are headed lower. The spread reached a record 1.65 percentage points on Nov. 21, almost quadrupling this quarter. Rate Cuts Subbarao has cut the benchmark overnight lending rate, or the repurchase rate, twice since Oct. 20 to 7.5 percent, from a seven-year high of 9 percent. Offshore forward contracts show traders scaled back bets for how far the rupee will weaken in the next month for a fifth day. Non-deliverable contracts show the currency will trade at 50.03 a month from now, compared with expectations for 51.26 a week ago. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Indian rupee forwards traded overseas are non-deliverable, meaning they are settled in dollars rather than the local currency. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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