Rupee ETFs Strengthen as Foreign Investors Return to India

ETF Trends

Indian rupee-related exchange traded funds are appreciating, with the currency trading around an 8-month high, as overseas investors dipped back into India’s equities and fixed-income markets on bets that a new government will stimulate growth.

The WisdomTree Indian Rupee Fund (ICN) is up 3.9% year-to-date while the  Market Vectors S&P Indian Rupee/USD ETN (INR) has gained 7.8%.

The Indian rupee closed at 60.48 per U.S. dollar Tuesday, its highest level since August 1, 2013, The Economic Times reports.

“The gains were mainly attributed to the consistent flows in the Indian equity and debt markets by the FIIs,” Niki Mistry, research analyst at India Forex Advisors, said in the Economic Times. “The local stock market seems to be doing well and the currency has also been stable for the last few months, which have helped in attracting more inflows.”

Foreign investors funneled $3.5 billion into India’s stocks and bonds this month, reports John Detrixhe for Bloomberg. Foreign investors have to convert to the rupee to invest in India’s markets, increasing demand for the currency.

Investors are beginning to warm up to Indian equities as inflation eases and the government projects higher growth and a narrowing deficit. For instance, the the WisdomTree India Earnings Fund (EPI) jumped 8.7% over the past month.

Moreover, investors have been pouring back into India’s equity market on hopes that the opposition Bharatiya Janata Party, which is seen as more business friendly, would win elections. [India ETFs Surge as BSE Hits Record]

“Overall fundamentals are improving for India and there’s a market perception that a BJP win could be good for inflows,” Hamish Pepper, a strategist at Barclays Plc, said in the Bloomberg article. “This is a very positive time for the rupee.”

WisdomTree Indian Rupee Fund

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ICN_ETF

For more information on the rupee currency, visit our Indian rupee category.

 

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