By Anil Varma Dec. 16 (Bloomberg) -- India’s rupee rose to the highest in more than five weeks on speculation measures taken by the government and the central bank to bolster the economy will encourage overseas investors to shift more money to the country. The currency climbed for a second day after India’s Economic Affairs Secretary Ashok Chawla said yesterday the government will take additional steps to support Asia’s third- largest economy as it faces a deeper-than-expected slump. The Reserve Bank of India has slashed interest rates three times this quarter to boost growth. “The currency market is expecting some dollar inflows today and traders seem to be positioning themselves for that,” said Agam Gupta, head of trading at Standard Chartered Plc’s Indian unit in Mumbai. “The rupee may gain further from here.” The rupee rose 0.3 percent to 47.905 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the highest closing since Nov. 10. Nine of the 10 most- traded Asian currencies outside Japan gained. The Indian currency may rise to 47.70 in the coming days, Gupta said. The rupee has rebounded 5.8 percent from a record low of 50.615 touched on Dec. 2. The currency’s 18 percent loss this year is still the biggest since 1991, when a balance of payments crisis forced the South Asian nation to pawn its gold with the International Monetary Fund to pay for imports. The Indian currency slid this year as the global financial crisis spurred investors to pull money out of the country, Junior Finance Minister Pawan Kumar Bansal said today. It also fell as the dollar strengthened against other currencies and as India paid more for its oil imports, he said in the lower house of parliament in New Delhi. Curbing Currency Loss India has taken measures to attract investment and stem currency losses, allowing domestic companies to borrow more abroad and introducing a special facility to help refiners raise foreign currency to pay for crude oil imports, Bansal said. In addition, the nation has allowed banks to pay higher interest rates on foreign-currency deposits to attract capital inflows, he said. Overseas investors bought Indian shares worth an average $42 million a day more than they sold this month, compared with net daily sales of $46 million and $186 million respectively in November and October, according to data provided by the Securities and Exchange Board of India. The Bombay Stock Exchange Sensitive Index, gained 1.5 percent today, adding to yesterday’s gains. The rupee also strengthened as offshore forward contracts showed traders scaled back bets for how far the currency will weaken in the next month. Non-deliverable contracts show the currency will trade at 48.38 a month from now, compared with expectations for 48.44 yesterday. 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 reporters on this story: Anil Varma in Mumbai at avarma3@bloomberg.net.

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