India’s Rupee Rises as Debt Limit Auction May Spur Fund Inflows

India’s rupee rose, extending its rebound from a record low reached last week, on speculation an auction of debt-purchase quotas to foreign investors this week will spur investment inflows from abroad.

The currency strengthened for the second time in three days before the Securities and Exchange Board of India allocates limits that will allow a total $10 billion investment in local-currency bonds. The Bloomberg-JPMorgan Asia Dollar Index, tracking the region’s 10 most-active currencies excluding the yen, gained after a report showed U.S. retail sales surged 16 percent to a record over the Thanksgiving weekend, easing concerns about the global economic recovery.

“The market is expecting some inflows from the bond quota auctions this week,” said Krishnamurthy Harihar, treasurer at FirstRand Ltd. in Mumbai. “A lot though will depend on news from the U.S. and especially Europe. This will have a significant impact on the currency.”

The rupee advanced 0.6 percent to 51.9650 per dollar in Mumbai, according to data compiled by Bloomberg. It fell 1.8 percent last week, touching a record low of 52.7300 on Nov. 22.

Three-month offshore forwards traded at 52.87 to the dollar, compared with 53.28 on Nov. 25. 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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