Stock inflows take rupee to 5-month high

The rupee gained, touching the highest level in almost five months, after overseas investors boosted holdings of the country's shares to benefit from India's economic growth outlook.

Global funds bought $1.6 billion more Indian stocks than they sold last month through March 30, exchange data show. India's $1.3 trillion economy will expand as much as 9.25% this financial year started April 1, the most since the year through March 2008, the government forecast in February.

"The stock market is looking positive with decent capital inflows," said J Moses Harding, a Mumbai-based executive vice-president at IndusInd Bank. The rupee may trade between 44.50 and 45 per dollar over the next month, he said.

The rupee strengthened 0.4% to 44.4175 per dollar at the 5 pm close in Mumbai, according to data compiled by Bloomberg. It touched 44.32 earlier, the strongest level since November 11. The currency market was closed on Monday and on April 1. Offshore forwards indicate the rupee will trade at 45.09 to the dollar in three months, compared with expectations of 45.27 on April 1.

The central bank's "compulsions" to act against inflation are strong, deputy governor Subir Gokarn said ahead of the next monetary policy announcement on May 3.