Rupee Set for Weekly Increase in India as Economic Growth Lures Investors

India’s rupee headed for the biggest weekly gain in more than a month on speculation accelerating economic growth will prompt investors to increase purchases of the nation’s stocks.

The currency strengthened to the highest level in two weeks as funds based abroad raised holdings of Indian shares to a record and the government reported the fastest pace of expansion in the second quarter since 2007. The approaching Sept. 15 deadline for corporate tax payments is probably spurring a bout of dollar sales, supporting the rupee, said Sudarshan Bhatt at Corporation Bank.

“The stronger growth and the surge in shares this week are helping the rupee,” said Bhatt, the Mumbai-based chief foreign- exchange trader at the bank.

The rupee appreciated 0.5 percent from a week ago to 46.68 per dollar as of 10:45 a.m. in Mumbai, according to data compiled by Bloomberg.

Overseas investors raised holdings of Indian equities to an all-time high of $85.8 billion as of Sept. 1, data from the Securities & Exchange Board of India show. The Bombay Stock Exchange’s Sensitive Index of shares was set for the best week since Aug. 6

India’s gross domestic product rose 8.8 percent in the three months through June from a year earlier, after an 8.6 percent increase in the previous quarter, the Central Statistical Organisation said on Aug. 31. Local companies pay tax in quarterly portions in June, September, December and March.

To contact the reporter on this story: V. Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net

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