India’s rupee rose for a second week and the benchmark stock index climbed to a two-month high as overseas investors added to holdings of the nation’s assets. The currency advanced to its strongest level since May 3 after funds based abroad bought $523 million more shares than they sold in the first three days of this week, taking net purchases for 2011 to $1.6 billion, according to exchange data. A government report yesterday showed gains in food prices slowed to a seven-week low. “For the past few days we have seen investors positive on equities,” said Krishnamurthy Harihar, a Mumbai-based treasurer at FirstRand Ltd. “Inflation numbers have also been positive for the currency.” The rupee rose 0.6 percent this week to 44.3313 per dollar and was up 0.2 percent today, as of 9:24 a.m. in Mumbai, according to data compiled by Bloomberg. The currency touched its high of 44.3138 earlier today. An index measuring wholesale prices of agricultural products increased 7.61 percent in the week ended June 25 from a year earlier, the smallest gain since the period to May 7, the commerce ministry reported. India’s economy expanded 7.8 percent in the first quarter of 2011, compared with 8.3 percent in the previous three months, government data showed. The Bombay Stock Exchange Sensitive Index of stocks climbed 1.7 percent from July 1, a third week of gains. Offshore forwards indicate the rupee will trade at 44.83 to the dollar in three months, compared with expectations of 44.98 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. To contact the reporter responsible for this story: Khalid Qayum in Singapore at kqayum@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

Source