Bloomberg News

Rupee Advances on Optimism Europe Making Progress on Debt Plan

October 19, 2011

Oct. 19 (Bloomberg) -- India’s rupee strengthened on speculation Europe’s policy makers will be able to contain the region’s debt crisis, boosting demand for emerging-market assets.

The BSE India Ltd.’s Sensitive Index rose 2 percent after the U.K.’s Guardian newspaper reported that Germany and France had agreed to boost the region’s rescue fund, even as a person with direct knowledge told Bloomberg News no deal has been reached. The Dollar Index, which tracks the currency’s performance against six major trading partners, declined 0.5 percent.

“The rupee is largely moving on the back of the rise in equities,” said Ashtosh Raina, head of foreign-exchange trading at HDFC Bank Ltd. in Mumbai. Broad weakness in the dollar has also benefited the Indian currency, he said.

The rupee advanced 0.3 percent to 49.1525 per dollar in Mumbai, according to data compiled by Bloomberg.

Foreign investors bought $81 million more Indian shares than they sold on Oct. 17 following net purchases of $345 million the previous week, exchange data show.

Offshore forwards indicate the rupee will trade at 49.86 to the dollar in three months, compared with expectations for a rate of 50.03 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

--With assistance from V Ramakrishnan in Mumbai. Editors: Andrew Janes, Abhay Singh

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at

To contact the editor responsible for this story: James Regan at

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