Mumbai: India’s rupee headed for its biggest weekly gain since July as foreign funds pumped money into local assets amid the Federal Reserve’s decision not to raise US interest rates.

Overseas funds are set to be buyers of rupee-denominated debt for a fourth straight week, while inflows into stocks are on course to be the biggest since the five days ended Aug. 12. The Fed refrained from tightening this week, while the Bank of Japan reinforced optimism that it will keep in place measures to spur economic growth and inflation, boosting demand for emerging-market assets. Indian sovereign bonds were also poised for a weekly advance.

The rupee climbed 0.5 per cent, the most since the five days ended July 1, to 66.6550 a dollar as of 11:47am in Mumbai, prices from local banks compiled by Bloomberg show. The currency, which was little changed Friday, has jumped 1.3 per cent since June 30, set for its first quarterly advance in six.

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“The main driver for the currency this week is the Fed’s decision to not raise rates as that is going to keep demand intact for Indian assets,” said Gaurav Sharma, a senior currency analyst at Religare Commodities Ltd in Noida, near New Delhi. “We expect the rupee to rise to 66.50 per dollar by next week on the back of more inflows.”

The S&P BSE Sensex index of equities headed for a weekly gain. An initial share sale by India’s biggest private-sector life insurer also helped boost investor appetite this week, according to Religare’s Sharma. The 60.6-billion rupee ($909 million) initial public offering by ICICI Prudential Life Insurance Co. drew orders of 10.5 times the amount of stock for sale, exchange data show.

The yield on Indian government notes maturing in September 2026 slipped seven basis points over five days to 6.79 per cent, prices from the central bank’s trading system show. A pickup in monsoon rains eased concern over inflation, adding to the optimism for local bonds. The Reserve Bank of India next reviews monetary policy on October 4.