Robust foreign inflows, fundraising by banks help rupee fight August curse

India’s rupee has been shielded from the headwind it typically faces in August, thanks to the robust foreign inflows into share sales by the nation’s marquee lenders.

ICICI Bank Ltd., Axis Bank Ltd. and mortgage lender HDFC Ltd. have raised a combined Rs 350 billion ($4.7 billion) this month. Founders of Bandhan Bank Ltd., India’s most profitable lender, sold Rs 106 billion of shares to investors including BlackRock Inc. Together with smaller offerings from companies including Info Edge (India) Ltd., stocks inflow in August reached $3.5 billion, the highest in Asia ex-China.

The fundraising and a weak dollar have meant the rupee is stable this year in August, versus an average decline of about 2.5% in the month over the past decade. A seasonal pattern has seen the currency weaken this month in six of the past 10 years, though analysts aren’t able to put a finger to the exact cause.

“Rupee has been trading within a narrow range so far this month, with a weaker U.S. dollar helping to offset the seasonal rupee weakness,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group 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 soak up dollars. The nation’s foreign exchange reserves are at an all-time high of $538 billion, largely due to the RBI’s dogged purchases of the greenback.