By Anil Varma July 17 (Bloomberg) -- India’s rupee headed for its best week in almost two months as increasing evidence of a global economic recovery stoked demand for emerging-market assets. The rupee yesterday touched a one-week high as foreigners’ stock purchases in 2009 exceeded sales by $6 billion, 83 percent more than a year earlier, according to data from the Securities and Exchange Board of India. The MSCI Asia Pacific Index of regional shares advanced 2.5 percent this week after separate reports showed U.S. industrial output shrank the least in eight months and economic growth in China and Singapore quickened. “Global economic data is now bringing more comfort to investors, and that will spur investment flows,” said Krishnamurthy Harihar, treasurer in Mumbai at the Indian unit of FirstRand Ltd., South Africa’s second-largest financial services company. “The rupee should show a stabilizing to strengthening bias from here.” The rupee climbed 0.6 percent this week to 48.6950 per dollar as of 10:15 a.m. in Mumbai, according to data compiled by Bloomberg. That’s the biggest gain since the five-day period ended May 22. The currency is Asia’s second-best performer this week after South Korea’s won. The Bombay Stock Exchange Sensitive Index, or Sensex, rallied 7.2 percent this week. Forward Contracts Offshore forwards contracts indicate traders predict the rupee will decline to 48.84 in a month, compared with expectations for a rate of 49.11 at the end of last week. 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. Federal Reserve figures showed on July 15 that U.S. industrial production dropped 0.4 percent last month, the least in eight months. China yesterday said economic growth quickened to 7.9 percent last quarter from a year earlier after a 6.1 percent gain in the previous three months. Singapore said on July 14 that its economy expanded an annualized 20.4 percent last quarter from the previous three months and raised its forecast for 2009, saying GDP will shrink 4 percent to 6 percent this year, compared with an earlier prediction for a 9 percent contraction. To contact the reporter on this story: Anil Varma in Mumbai at Avarma3@bloomberg.net.

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