India’s rupee rose for an eighth day amid speculation global funds will resume purchases of the nation’s debt after a two-month selloff.
The South Asian nation will grant overseas investors access to an additional 165 billion rupees ($2.5 billion) of sovereign and state-government notes from Jan. 1, as part of a September plan to allow a phased increase in foreign-investment limits. The new quotas will attract funds, according to Edelweiss Financial Services Ltd. and RBL Bank Ltd., after global holdings of rupee-denominated securities dropped 91.6 billion rupees over December and November amid a rise in U.S. interest rates.
“The rupee will be in an appreciative trend as investors return to higher-yielding Indian assets,” said Ankur Jhaveri, co-head of currencies and rates at Edelweiss in Mumbai, adding that the currency will outperform Asian peers.
The rupee strengthened 0.1 percent from Dec. 23 to 66.1350 a dollar as of 11:18 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It climbed to a five-week high of 66.0975 earlier. The currency’s eight-day rising streak is the longest since June 2011 and has contributed to its 0.8 percent advance in December, the second-best performance in Asia excluding Japan. The rupee has declined 4.7 percent in 2015.
Investing in rupees will earn 8 percent, including interest, by end-2016, estimates compiled by Bloomberg show. That’s the most in the region.
Ten-year Indian sovereign bonds advanced for a third day. The yield on notes due May 2025 fell three basis points to 7.72 percent, set for its lowest close since Dec. 17, according to prices from the central bank’s trading system. It is still the highest in Asia after Indonesia. Indian bond and currency markets were shut Thursday and Friday for local holidays.
Bloomberg
