Indian Rupee Completes Weekly Gain as Investors Return to Stocks

India’s rupee completed a weekly gain on speculation European policy makers are a step closer to resolving the region’s debt crisis, supporting demand for emerging-market assets.

Overseas investors bought a net $227 million of Indian equities this week as of Oct. 12, the biggest increase in holdings since the period ended Sept. 2, according to exchange data. The BSE India Sensitive Index of shares rose 5.2 percent from a week ago after Infosys Ltd., the nation’s second-largest software exporter, reported profit that beat analysts’ estimates.

“There is a sense that an imminent crisis in Europe has been averted,” said J. Moses Harding, an executive vice president at IndusInd Bank Ltd. in Mumbai. “Having said that, the concerns have not yet disappeared.”

The rupee gained 0.3 percent this week to 49.0237 per dollar in Mumbai, according to data compiled by Bloomberg. It has appreciated 1.8 percent since reaching a 2 1/2-year low of 49.8900 on Sept. 23.

A government report today showed India’s inflation accelerated 9.72 percent in September from a year earlier, exceeding 9 percent for a 10th straight month and maintaining pressure on the central bank to extend its record interest-rate increases.

European Summit

Reserve Bank of India Governor Duvvuri Subbarao said yesterday the nation’s inflation must ease before the central bank can reduce interest rates.

European Central Bank President Jean-Claude Trichet and global leaders from the Group of 20 nations are meeting in Paris today, ahead of a summit in Brussels on Oct. 23. German and French leaders pledged at a meeting Oct. 9 to devise a plan to recapitalize banks, help Greece and strengthen Europe’s economic governance. German Chancellor Angela Merkel said earlier this month that Europe will do “everything necessary” to ensure that banks have enough capital.

Offshore forwards indicate the rupee will trade at 49.69 to the dollar in three months, compared with expectations for a rate of 49.74 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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