Feb. 28 (Bloomberg) -- India’s rupee strengthened after overseas funds stepped up purchases of local-currency company bonds to meet a quota deadline.
The Securities & Exchange Board of India auctioned $5 billion of corporate debt-purchase quotas on Nov. 30 to foreigners, who must use the allocations by the end of today or let them expire. Foreign investors added $898 million to holdings of Indian debt last week, exchange data show, following net sales of $275 million in the previous period.
“Inflows are supporting the rupee as today is the deadline for the transactions,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “We will also see month-end demand for dollars from importers.”
The rupee advanced 0.3 percent to 49.0775 per dollar in Mumbai, according to data compiled by Bloomberg. The currency has strengthened 8.1 percent this year.
Three-month onshore forward contracts traded at 50.14 a dollar, compared with 50.31 yesterday, while non-deliverable contracts traded at 50.18 from 50.36 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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