Indian Rupee Advances Most This Month as Inflows Seen Increasing

By Divya Patil - Apr 9, 2014

India’s rupee strengthened the most this month on optimism Asia’s relatively fast economic growth will attract capital inflows.
Global funds pumped $10.3 billion into local stocks and bonds this year, exchange data show. Developing Asian economies are forecast to grow 6.7 percent this year, outpacing an estimated 2.8 percent expansion for the U.S., the International Monetary Fund said in a report yesterday. The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies excluding the yen, touched a seven-week high.
“The IMF report is a positive as growth in emerging markets is likely to be higher, which supports the case of continued foreign inflows into the region,” said Amogh Moghe, a foreign-exchange trader at Mumbai-based brokerage Mecklai & Mecklai Ltd. “The dollar’s weakness against most Asian currencies is also boosting the rupee.”
The rupee rose 0.2 percent from its April 7 close to 60.0050 per dollar as of 9:46 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. Financial markets in India were shut yesterday for a local holiday.
“There are some bunched-up inflows after yesterday’s holiday, which too are supporting the currency,” said Moghe.
The rupee gained 3.2 percent in the first quarter, the biggest advance since the three months through September 2012, and touched an eight-month high of 59.60 per dollar on April 2 as policies aimed at containing inflation and the current-account deficit buoyed confidence.

Rupee Forecasts

Gains in the rupee will halt as the winner of elections in the world’s largest democracy needs to build consensus for policies to revive the economy, according to the most accurate forecaster for the currency.