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 (NYSEArca: ICN) is up 3.9% year-to-date while the Market Vectors S&P Indian Rupee/USD ETN (NYSEArca: 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 (NYSEArca: EPI) jumped 8.7% over the past month.