Oct. 13 (Bloomberg) -- India’s rupee strengthened for a second day on speculation Europe’s policy makers will stem the region’s debt crisis, boosting demand for emerging-market assets.
The currency headed toward the highest level this month after European Commission President Jose Barroso yesterday called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund. Foreign investors bought a net $95 million worth of Indian equities this week to Oct. 11, the first addition to holdings since the seven days to Sept. 9. The BSE India Sensitive Index of shares rose 0.66 percent.
“This is a relief rally after yesterday’s news from Europe, which could gain strength if the euro gains against the dollar when European markets open,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank. “The Sensex too is currently supporting the rupee.”
The rupee strengthened 0.1 percent to 48.9250 per dollar as of 10:08 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 48.8675 on Oct. 10, the highest level since Sept. 29.
Offshore forwards indicate the rupee will trade at 49.56 to the dollar in three months, compared with expectations for a rate of 49.61 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
--Editors: Sandy Hendry, Ven Ram
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