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Shado Baker in Asian Markets,

Rupee Gains on Optimism Improving Economy to Lure More Inflows

India’s rupee advanced for a fifth day on optimism slowing inflation and quickening economic growth will lure more inflows to the country’s stocks and bonds.

Overseas investors have pumped a net $3.6 billion into local shares and debt this month, exchange data show. Wholesale-price inflation eased to 3.74 percent in August from a year earlier, the slowest pace since 2009, a report showed last week. The nation’s $1.9 trillion economy expanded 5.7 percent in the second quarter, the most since the first three months of 2012.

“The constant flow of foreign funds has supported the rupee,” said Anish Vyas, a Mumbai-based currency analyst at Angel Broking Ltd. “Improvement in economic growth and easing inflation indicate the Indian economy is progressing on the right path.”

The rupee strengthened 0.1 percent to 60.7750 per dollar as of 9:50 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. That took its gain since Sept. 15 to 0.6 percent. The Indian currency has rebounded 1.7 percent in 2014, after last year’s 11 percent slump.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.10 percentage point, to 7.25 percent.

Three-month offshore non-deliverable forwards rose 0.2 percent today to 61.68 per dollar, according to data compiled by Bloomberg. 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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