India’s Rupee Advances as China Stimulus Seen Buoying Confidence

India’s rupee gained for a second day on optimism confidence in Asian economies will improve as China steps up growth stimulus and global funds increased holdings of the nation’s assets.

The People’s Bank of China will inject 500 billion yuan ($81 billion) into the nation’s five biggest banks for a three-month period, according to a government official, who asked not to be identified because the measure hasn’t been formally announced. Global funds have pumped about $13 billion into the nation’s bonds and stocks this quarter, exchange data show.

“The rupee gained in the morning, tracking other Asian currencies, supported by the stimulus injection by the central bank of China,” said Anish Vyas, a Mumbai-based currency analyst at Angel Broking Ltd. Higher inflows into equities and bonds helped the rupee strengthened further, he said.

The rupee rose 0.2 percent to close at 60.9150 per dollar in Mumbai, prices from local banks compiled by Bloomberg show. The S&P BSE Sensex of Indian shares gained 0.5 percent, the most in more than a week.

The yield on India’s 8.4 percent government bonds due July 2024 was little changed at 8.50 percent, prices from the central bank’s trading system show. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, dropped the most since June yesterday as the Fed started its two-day policy meeting.

One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, fell two basis point, or 0.02 percentage point, to 7.48 percent.

Three-month offshore non-deliverable forwards rose 0.3 percent to 61.89 per dollar, data compiled by Bloomberg show. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

Before it's here, it's on the Bloomberg Terminal.