India’s rupee is set for its biggest monthly gain since March after foreign funds pumped cash into the nation’s assets to take advantage of its yield advantage over developed countries. The currency has advanced 0.7 percent since July 26, when the Reserve Bank of India raised its repurchase rate to 8 percent from 7.5 percent, a move predicted by none of 22 economists surveyed by Bloomberg. India’s rate compares with a maximum 0.25 percent in the U.S. and Japan. Foreign investors raised holdings of Indian debt by 4.7 percent this month through July 27 to a record $21.7 billion, and bought $1.7 billion more local stocks than they sold, according to exchange data. “Right now, the Indian rupee gives the highest carry among most of the Asian currencies so it’s pretty attractive,” said Kenneth Kan, the Singapore-based head of emerging markets foreign-exchange trading at Credit Agricole CIB. The rupee strengthened 1.4 percent this month to 44.0830 per dollar as of 9:55 a.m. in Mumbai, according to data compiled by Bloomberg. It gained 0.6 percent this week and was little changed today. The currency reached 43.8550 on July 27, the highest level since Aug. 29, 2008. India’s benchmark lending rate compares with 6.75 percent in Indonesia and 3.25 percent in South Korea. Offshore forwards indicate the rupee will trade at 44.49 per dollar in three months, compared with expectations of 44.50 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 on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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