Standard Chartered says rupee to gain 2%

India\'s rupee will advance 2 per cent by year-end to the strongest level since 2008 as the nation\'s rising interest rates lure overseas capital, according to Standard Chartered Plc. The UK bank predicts the rupee will rise to 43.50 per dollar by December 31, a level last seen on August 25, 2008, compared with an earlier forecast for 44.50. The currency weakened 0.2 per cent to 44.3750. Foreigners raised holdings of Indian debt by $3.5 billion (Dh12 billion) this year, exchange data show, as ten-year yields rose 48 basis points to 8.40 per cent. That is the highest level among the 14 Asian markets tracked by Bloomberg and more than triple the 2.59 per cent yield on US Treasuries. Luring foreign investors Article continues below \"The higher yields India offers compared with developed markets are luring foreign investors,\" Priyanka Kishore, a Mumbai-based currency strategist at Standard Chartered, said. \"The correlation between the rupee and the carry has never been so strong.\" The rupee rallied 1.2 per cent in July, the biggest gain in four months, and touched a 35-month high on July 27, a day after the Reserve Bank of India raised its benchmark to 8 per cent.