The rupee climbed the most in almost a week as the U.S. dollar weakened and on signs overseas demand for Indian stocks is intact.
Foreign investors have bought a net $245 million of local shares in October, set for an eighth straight month of inflows, data compiled by Bloomberg show. The S&P BSE Sensex index, the nation's benchmark equity measure, added 0.2 percent, halting a three-day decline. A gauge of the greenback dropped for a second day after Donald Trump and Hillary Clinton sparred in their second U.S. presidential debate.
"A weaker dollar seems to be helping the rupee, which is also getting supported by equity flows," said Bhupesh Bameta, head of research for currencies and rates at Edelweiss Financial Services Ltd.. Going forward, the rupee will be on a "weaker footing" due to a possible interest-rate increase by the Federal Reserve, he said.
The rupee rose 0.2 percent to 66.5850 per dollar as of 13:01 p.m. in Mumbai, set for the biggest gain since Oct. 4, prices from local banks compiled by Bloomberg show. The currency may weaken to 68 by November, said Bameta. Indian markets are shut Tuesday and Wednesday for public holidays.
Sovereign bonds climbed, snapping two days of losses. The yield on government notes due September 2026 fell three basis points to 6.70 percent, according to the Reserve Bank of India's trading system.
India plans to auction 140 billion rupees ($2.1 billion) of treasury bills on Monday, while 15 state governments aim to sell 176 billion rupees of bonds, according to separate statements on the central bank's website. There's no sovereign-debt auction scheduled for Friday.
© 2016 Bloomberg L.P
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