Indian Rupee Gains as China's Stimulus May Lure Funds to Asia
By Anil Varma
Nov. 10 (Bloomberg) -- India's rupee rose to its highest in more than a month on speculation China's $586 billion spending plan will boost investor confidence in Asian economies.
The currency advanced the most in almost a week as Asian equities gained after China yesterday announced infrastructure spending, tax deductions and farming subsidies. Global funds bought more Indian shares than they sold in the first four days of the past week, stock exchange data showed.
``The Chinese economic package is good news for currencies because it shows Asian governments are proactive in dealing with the crisis,'' said Krishnamurthy Harihar, treasurer at Development Credit Bank Ltd. in Mumbai. ``The rupee may gain as the portfolio investment numbers are looking better.''
The rupee gained as much as 1 percent to 47.1925 a dollar, the highest since Oct. 6, before trading at 47.23 as of 9:59 a.m. in Mumbai, according to data compiled by Bloomberg. It may strengthen to 47 in the coming weeks, Harihar said.
China's stimulus package, equivalent to almost a fifth of its gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said. The funds, of which 100 billion yuan ($14.7 billion) is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports. China will also allow tax deductions for purchases of machinery and raise grain purchase prices and subsidies for farmers.
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