By Anoop Agrawal Oct. 13 (Bloomberg) -- India's rupee rose, snapping a five- day losing streak, on speculation government efforts to shore up banks worldwide will unlock a lending freeze and lure investors back to emerging markets. The currency rebounded from a record low of 49.26 per dollar touched on Oct. 10 as stocks rose after Australia guaranteed bank deposits and European leaders agreed to support lenders to end the credit crisis. India is working on measures to increase the amount of cash in the financial system, Finance Minister Palaniappan Chidambaram said today. The statement helped the benchmark stock index gain after having fallen the most in 18 years last week. ``The authorities are making aggressive efforts to prevent deepening of the crisis, which is giving confidence that normalcy will return sooner rather than later,'' said Parthasarathi Mukherjee, president of treasury at Axis Bank Ltd. ``That should bring back overseas investors to Indian assets.'' The rupee rose 0.4 percent to 48.26 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. Mukherjee didn't give a forecast. India's benchmark stock index, the Bombay Stock Exchange Sensitive Index, rose as much as 7.9 percent today. Funds abroad sold Indian equities worth a record $10.2 billion more than they bought this year, data released by the Securities & Exchange Board of India show. Their net purchases totaled an all-time high of $17.2 billion in 2007. Coordinated Action Chidambaram said the government, the Reserve Bank of India and the Securities & Exchange Board of India are working on a coordinated action to infuse liquidity into the system, following the measures already taken. India's growth was satisfactory and the stock markets weren't the only economic indicator, he said. Central bank Governor Duvvuri Subbarao said on Oct. 11 India may ``escape the worst consequences'' of the global crisis even as its currency and stock markets experience some impact. Gains in the rupee were moderated by speculation some importers including Indian Oil Corp., the nation's largest refiner, bought cheaper dollars to settle overseas payments. ``Importers probably are of the view that the rupee may not be able to hold gains and so they took the opportunity to buy dollars today,'' said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. ``The underlying view is that the rupee will weaken in the near term.'' The rupee rose to as much as 48.02 earlier today. It may decline to as low as 48.5 this week, Babu said. The rupee is the second-worst performer this year among the 10 most-traded currencies in Asia excluding the yen. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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