May 4 (Bloomberg) -- India’s rupee rose to the highest level in more than two weeks as overseas investors increased holdings of the nation’s shares and the currency on further signs the global recession may be drawing to an end.
The currency appreciated for a second day and Asian stocks rallied after a report showed China’s manufacturing expanded for the first time in nine months, boosting the outlook for regional exports. Foreign investors bought $1.3 billion more Indian shares than they sold in April, the biggest net monthly purchases since December 2007, according to data from the Securities & Exchange Board of India.
“Global risk aversion is consistently on the rise,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “The rupee should continue to draw benefit from that and extend the pace of increase.”
The rupee rose 0.9 percent to 49.655 per dollar as of 10:08 a.m. in Mumbai from April 29, according to data compiled by Bloomberg. It reached 49.555, the highest level since April 16. The currency may advance to 49 in a few days, Babu said. Markets in Mumbai were closed on April 30 for elections and on May 1 for a public holiday.
The MSCI Asia Pacific excluding Japan Index of stocks rose 4 percent today, headed for its highest close since October. The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 4.3 and has rebounded 45 percent from a three-year closing low reached on March 9.
Offshore contracts indicate traders are paring bets on a decline in the rupee, predicting a spot rate of 49.76 to the dollar in a month, compared with expectations for a rate of 50.49 a week ago. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
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