Rupee Completes Biggest Weekly Gain Since May on Inflow OptimismKartik Goyal
India’s rupee completed its biggest weekly gain since May on optimism demand for emerging-market assets will be sustained amid the prospect of further euro-area stimulus.
European Central Bank President Mario Draghi said this week that policy makers may undertake measures including buying sovereign bonds to spur growth. Minutes of the Federal Reserve’s December meeting released Jan. 8 showed the U.S. is unlikely to raise interest rates before late April. Global funds bought a record $26.4 billion of Indian debt in 2014, while pouring about $16 billion into the nation’s stocks, exchange data show.
The rupee climbed 1.6 percent from Jan. 2 to close at 62.3250 a dollar in Mumbai, the biggest weekly gain since May 16, prices from local banks compiled by Bloomberg show. The currency rose 0.6 percent today and is Asia’s best performer this week. Indian sovereign bonds completed a second weekly advance.
“Strong inflows continue to lend support to the rupee,” said Paresh Nayar, head of currency and money markets at FirstRand Ltd. in Mumbai. “India looks relatively attractive when you see other major world economies slowing.”
The Reserve Bank of India forecasts the $1.9 trillion economy, Asia’s third-largest, to grow 5.5 percent in the year ending March 2015, compared with 4.7 percent last year.
Three-month offshore non-deliverable forwards for the rupee rose 1.6 percent this week and 0.7 percent today to 63.27 a 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.
The yield on Indian government notes due July 2024 fell three basis points, or 0.03 percentage point, from Jan. 2 to 7.84 percent, prices from the RBI’s trading system show. The rate, which decreased two basis point today, closed at its lowest since Dec. 15.