BLBG: Indian Rupee Rises for 1st Time in Five Days on Fund Purchases
India’s rupee rose for the first time in five days as data showed equity purchases by foreign funds exceeded sales for a 10th straight day, the longest stretch since December 2007.
The currency strengthened on speculation India’s economy, forecast by the central bank to grow 6 percent in the year that started April 1, will weather the global recession better than most other emerging markets. The Reserve Bank of India cut interest rates yesterday for the third time this year to spur spending and investment.
“The rupee should be on a stable to appreciating trend from here on,” Rahul Chadha, Hong Kong-based head of Indian equities at Mirae Asset Global Investment, said in an interview on Bloomberg Television. “India is one of the few trillion- dollar economies that will still grow at 5 percent. Foreign investors will find India a very attractive investment.” Mirae has about $40 billion in assets under management.
The rupee gained 0.2 percent to 50.34 per dollar as of 10:16 a.m. in Mumbai, according to data compiled by Bloomberg. The currency has added 0.7 percent this month, trimming losses from the past five quarters.
The Bombay Stock Exchange’s Sensitive Index has rebounded 34 percent from a three-year low reached on March 9. Overseas investors bought a net $1.1 billion of local shares this month, according to the Securities and Exchange Board of India.
“We expect inflows into Indian stock markets in the next 10 to 12 months,” Mirae’s Chadha said.
Lower Rates
Reserve Bank’s Governor Duvvuri Subbarao cut the benchmark reverse-repurchase rate to 3.25 percent from 3.5 percent. He also cut the repurchase rate, or the overnight lending rate, by a quarter-percentage point to 4.75 percent. Both benchmarks are now at their lowest since they were introduced in 2000.
The bank forecast Asia’s third-largest economy will grow at the slowest pace since 2003.
Offshore contracts indicate traders bet the rupee will trade at 50.70 to the dollar in a month, compared with expectations of 50.71 yesterday. 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.
