The rupee has advanced 1.3% in March, boosted by $2.4 billion of overseas purchases of local stocks, including inflows related to initial public offerings. Nine share-sale offers worth about 59 billion rupees ($813 million) this month would have added to one of the highest inflows into emerging Asia, according to Emkay Global Financial Services Ltd.
The prospect of an economic recovery, a rare current-account surplus and foreign-exchange reserves approaching $600 billion have put India in a strong position to ward off the impact of the U.S. Treasury-led selloff that’s roiled global risk assets.
“The rupee has had a decent year so far in the EMFX space, with March being an outlier,” said Madhavi Arora, lead economist at Emkay Global in Mumbai. A large part of the currency’s gains are due to “the huge line-up of IPOs, and possible robust foreign interest,” she said.
State-run companies raising dollar loans worth more than $1 billion in March, and the central bank tolerating gains, as opposed to its preference for a weaker currency until a few months ago, have also boosted the currency’s appeal.
Still, not all are bullish. Sajal Gupta, head of foreign-exchange and rates trading at Edelweiss Securities Pvt. expects the rupee to come under pressure as it runs into a seasonally weak period in May and June. He predicts the currency will weaken to 74 per dollar by the end of June, from Thursday’s close of 72.5275.