Rupee completed its first weekly advance since May on speculation government spending will fuel growth in Asia?s third-biggest economy. The rupee rose 0.5 % this week to 47.89 per dollar and gained 0.1 % on Friday.
Yields on the 6.07 % note due May 2014 dropped 28 basis points this week to 6.23 % The price rose 1.13 per 100 rupee face amount to 99.33. A basis point is 0.01 percentage point.
The currency approached a two-week high as foreign funds bought more Indian shares than they sold for a fifth straight day and the benchmark stock index jumped the most in a week. Rail minister Mamata Banerjee said Indian Railways, Asia?s oldest rail network, will buy new wagons and build more coaches to upgrade infrastructure and fuel economic expansion.
?Efforts of policy makers and their objectives do not appear to be unrealistic, which is generating some positive interest,? said Arun Nagarajan, a currency trader at Kotak Mahindra Bank in Mumbai. ?The rupee should continue its rally based on this sentiment.?
Five-year bonds completed the best week in almost two months on speculation a plan to sell stakes in state-owned companies will reduce government borrowing.The cost of five-year swaps, or derivative contracts used to guard against rate fluctuations, decreased. The rate, a fixed payment made to receive floating rates, dropped to 6.18% from 6.21% on Thursday.