By Anil Varma July 16 (Bloomberg) -- India’s rupee strengthened for a third day as economic data from the U.S. and China added to optimism the global economy is recovering, boosting demand for riskier emerging-market assets. The currency climbed to the highest level in more than a week after the Federal Reserve said U.S. industrial production shrank 0.4 percent in June, the least in eight months. China said economic growth quickened to 7.9 percent last quarter from a year earlier after expanding 6.1 percent in the previous three months. The MSCI Asia Pacific Index of regional shares advanced 1.5 percent, taking a three-day gain to 5 percent. “The rupee’s strength reflects optimism across global equity markets about improving economic prospects,” said Sanjay Arya, treasurer at state-owned Bank of Maharashtra in Mumbai. The rupee gained as much as 0.4 percent to 48.475 per dollar and traded at 48.6375 as of 9:45 a.m. in Mumbai, according to data compiled by Bloomberg. Offshore forwards contracts indicate traders predict the rupee will decline to 48.71 in a month, compared with expectations for a rate of 48.73 yesterday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are used for currencies that aren’t freely convertible and are settled in dollars. The Bombay Stock Exchange’s Sensitive Index, or Sensex, increased 6.3 percent in the past two days, the biggest gain for that period in almost two months. Overseas investors have bought Indian equities worth $5.8 billion more than they sold so far this year, an 81 percent increase from the same period last year, data released by the Securities and Exchange Board of India show. To contact the reporter on this story: Anil Varma in Mumbai at Avarma3@bloomberg.net.

Source