India’s rupee strengthened after overseas funds stepped up purchases of local-currency company bonds to meet a quota deadline.
The Securities & Exchange Board of India auctioned $5 billion of corporate debt-purchase quotas on Nov. 30 to foreigners, who must use the allocations by the end of today or let them expire. Foreign investors added $898 million to holdings of Indian debt last week, exchange data show, following net sales of $275 million in the previous period.
“Inflows are supporting the rupee as today is the deadline for the transactions,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “We will also see month-end demand for dollars from importers.”
The rupee advanced 0.1 percent to 49.1873 per dollar as of 9:58 a.m. in Mumbai, according to data compiled by Bloomberg. The currency has strengthened almost 8 percent this year.
Three-month offshore non-deliverable forward contracts traded at 50.22 a dollar, compared with 50.36 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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