By Anoop Agrawal Dec. 15 (Bloomberg) -- India’s rupee climbed to the highest level in more than a month as speculation the U.S. will bail out its automakers spurred a rally in regional stocks. The rupee was the best performer among the 10 most-active currencies in Asia outside Japan after a finance ministry official said India will take all steps needed to bolster its economy. The MSCI Asia Pacific Index of stocks jumped 4.1 percent and the Bombay Stock Exchange Sensitive Index, or Sensex, rose 1.5 percent. Overseas funds were net buyers of Indian stocks for the longest stretch in almost eight months. “Optimism is returning among investors and with increased appetite for risk, all assets including the rupee are getting re-priced upwards,” said Ritwij Mahanta, a trader at IndusInd Bank Ltd. in Mumbai. “The rupee has scope to extend gains.” The rupee rose 1.1 percent to 48.045 per dollar, at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It may advance to 47.25 in a few weeks, Mahanta said. The administration of U.S. President George Bush signaled it may use funds originally set aside for banks to prevent the collapse of General Motors Corp. and Chrysler LLC after the Senate rejected a bailout plan last week. The rupee has rebounded 5 percent from a record low touched on Dec. 2 on speculation India will cut interest rates further and unveil more measures to support economic expansion. A government report last week showed industrial production unexpectedly fell for the first time in 15 years, adding to evidence the $1.2 trillion economy may expand at the slowest pace in six years. More Steps “The government is committed that whatever steps are required to be taken in the near future as the scenario further unfolds will be taken,” economic affairs secretary Ashok Chawla said in a Bloomberg News interview in Hong Kong today. The government estimates the economy will grow 7 percent in the year to March 31, from 9 percent or more annually in the previous three years. India’s exports fell for the first time in seven years in October. The central bank on Dec. 6 lowered its benchmark repurchase rate to 6.5 percent from 7.5 percent, the third cut since October. The next day the government announced a $4 billion stimulus package. Offshore forward contracts show traders scaled back bets for how far the rupee will weaken in the next month. Non- deliverable contracts indicate the rupee will trade at 48.44 to the dollar in a month, compared with expectations for 48.72 on Dec. 12. 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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