India’s Rupee Advances on Optimism Fed Easing Will Spur Inflows
India’s rupee advanced the most in almost a week as prospects the U.S. central bank will ease monetary policy boosted the outlook for inflows into the nation’s higher-yielding assets.
Overseas investors poured $10 billion into local equities and bonds this year and have been net buyers every day this month, exchange data show. India’s 10-year government notes yield 659 basis points, or 6.59 percentage points, more than similar-maturity U.S. debt. Federal Reserve Chairman Ben S. Bernanke said yesterday he was prepared to “take further action as appropriate” to stimulate the country’s growth.
“The U.S. comments have helped boost investor confidence on global growth,” said Vikas Babu, a currency trader at state- run Andhra Bank in Mumbai. “With global macroeconomics improving, India stands to benefit substantially.”
The rupee advanced 0.4 percent to 55.2762 per dollar as of 9:59 a.m. in Mumbai, according to data compiled by Bloomberg. The currency may reach 55.20 before the end of the week, Babu forecast.
Three-month offshore non-deliverable forwards contracts traded at 56.21 a dollar, compared with 56.32 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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