India’s Rupee Gains a Second Week as Funds Return to Buy Stocks

India’s rupee rose a second week as overseas funds returned to buy stocks on optimism interest-rate cuts will help protect the economy from the global slump. The currency touched a one-month high this week after the government unveiled a $4 billion stimulus package in addition to the three rate cuts by the central bank starting Oct. 20. The Reserve Bank of India signaled it may lower its inflation target after a report yesterday showed gains in wholesale prices were the smallest in seven months. Global funds were net buyers of equities for a fifth day, the longest stretch in eight months. “There’s more optimism on India than many other nations reeling under fears of global recession as policy makers here have shown to be reasonably pro-active,” said K.V. Mallik, treasurer at state-owned UCO Bank in Kolkata. “That is encouraging inflows and helping the rupee.” The currency rose 2.1 percent this week to 48.56 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The rupee is the third-best performer this month among the 10 most-active currencies in Asia excluding the yen. International investors bought $403.8 million more Indian shares than they sold this month through Dec. 10, according to data from the Securities & Exchange Board of India. The benchmark Bombay Stock Exchange’s Sensitive Index completed its best week since the seven-day period ended Oct. 31. A slump in crude oil prices from their July record and a cut in local fuel prices have also added to speculation the central bank will reduce borrowing costs further.