Business | Economy

Indian rupee gains on growth speculation

India's rupee completed its first weekly advance since May on speculation government spending will fuel growth in Asia's third-biggest economy.

  • Bloomberg
  • Published: 23:26 July 3, 2009
  • Gulf News

Mumbai: India's rupee completed its first weekly advance since May on speculation government spending will fuel growth in Asia's third-biggest economy.

The currency approached a two-week high as foreign funds bought more Indian shares than they sold for a fifth straight day and the benchmark stock index jumped the most in a week. Rail Minister Mamata Banerjee on Friday said Indian Railways, Asia's oldest rail network, will buy new wagons and build more coaches to upgrade infrastructure and fuel economic expansion.

"Efforts of policymakers and their objectives do not appear to be unrealistic, which is generating some positive interest," said Arun Nagarajan, a currency trader at Kotak Mahindra Bank in Mumbai. "The rupee should continue its rally based on this sentiment."

The rupee rose 0.5 per cent last week to 47.89 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. It gained 0.1 per cent yesterday.

The $1.2 trillion (Dh4.4 trillion) economy may expand as much as 7.75 per cent this year amid signs of a "bottoming out" in the US and harvests benefiting from monsoon rains, the finance ministry said in the annual Economic Survey released yesterday. Growth could be as little as 6.25 per cent if there are delays in a US revival, the report said.

The rupee will drop almost 6 per cent in six months to as low as 51 per dollar as a delayed global economic recovery spurs capital outflows, according to Bank Julius Baer & Co.

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