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(Bloomberg) – The Indian rupee has been shielded from the headwind it typically faces in August, thanks to strong foreign inflows into equity sales by the country’s reputable lenders.
ICICI Bank Ltd., Axis Bank Ltd. and mortgage lender HDFC Ltd. raised 350 billion rupees ($ 4.7 billion) this month. The founders of Bandhan Bank Ltd., India’s most profitable lender, sold Rs 106 billion of shares to investors including BlackRock Inc., as well as smaller offerings from companies like Info Edge (India) Ltd., stock inflows in August reached $ 3.5 billion, the highest in Asia excluding China.
Thanks to fundraising and the weak dollar, the rupee is stable this year in August, compared to an average decline of about 2.5% in the month over the past decade. A seasonal trend has seen the currency weaken this month for six of the past 10 years, although analysts are unable to pinpoint the exact cause.
“The rupee has traded in a narrow range so far this month, with the weakness of the US dollar helping to offset the seasonal weakness of the rupee,” said Khoon Goh, head of Asia research at the group. Australian and New Zealand bank in Singapore. Strong equity inflows during the month are also helping the rupee’s cause, he said.
The currency still remains in the lower rungs of the Asian pack as the Reserve Bank of India continues to absorb dollars. The country’s foreign exchange reserves are at an all-time high of $ 538 billion, largely due to the RBI’s dogged purchases of the greenback.
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