BLBG: India’s Rupee Near Three-Week High as Overseas Funds Buy Stocks
By Anoop Agrawal
Nov. 10 (Bloomberg) -- India’s rupee traded near a three- week high on speculation economic growth prospects will prompt overseas investors to buy more local equities.
The currency may gain after Prime Minister Manmohan Singh said he sees clear signs of an “upturn” in Asia’s third- largest economy. Overseas funds have bought $14.4 billion more Indian shares than they sold this year through Nov. 6 as the benchmark stock index rose 71 percent. They had sold a record $9.5 billion in 2008, data from the stock-market regulator showed.
“Asset prices are rising and risk appetite is increasing only because of the improved confidence of investors on fundamentals and growth prospects,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai.
The rupee was little changed at 46.46 per dollar as of 9:31 a.m. in Mumbai, according to data compiled by Bloomberg. The currency yesterday touched 46.395, the highest since Oct. 21.
India may be among the first Group of 20 nations to begin winding back fiscal stimulus after Singh said faster economic growth would allow the measures to be withdrawn.
Gains in the currency may be moderated by speculation importers such as Indian Oil Corp., the nation’s largest refiner, will stock up on dollars to pay for crude-oil imports. The commodity has advanced more than 77 percent this year. India imports almost three-quarters of the oil it uses.
India’s sovereign rating won’t be raised without improvement in government finances, Tom Byrne, Moody’s Investors Service senior vice president, said in Shanghai today.
“Unless we see some hope for signs of improvement in government finance, India’s rating won’t be raised,” Byrne said in an interview. “We don’t see that yet.”
Offshore contracts indicate bets the rupee will trade at 46.47 against the dollar in a month, compared with expectations of 46.40 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 settled in dollars rather than the local currency.
To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
