Mumbai: Indian rupee rose to its highest in a week on Friday, tracking gains in other Asian currencies and a rally in the local stock market but dollar demand from oil refiners may prevent a further rise.
At 10:25 a.m. (0455 GMT), the partially convertible rupee was at Rs49.36/37 per dollar, its strongest since 22 October , and 0.7% stronger than its close of Rs49.69/70 on Wednesday. The market was shut on Thursday for a local holiday.
“The rupee opened stronger in line other Asian currencies. Even stocks have opened stronger, but there is some month-end demand expected to creep in,” said a senior dealer with a private bank.
The yen rose against the dollar and euro as a drop in Tokyo share prices renewed investor concern over riskier assets, while players cautiously awaited the Bank of Japan’s policy decision later in the day.
India’s main share index rose more than 8% early, catching up with sharp rises overseas on Thursday when the domestic market was closed.
Foreign funds have sold a net $12.9 billion worth of Indian stocks in 2008 after buying a record $17.4 billion last year.
The outflows had sent the rupee to a record low of Rs50.29 on Monday, at which point it had lost more than 7% in October and 21.6% in 2008.
UBS said in a note this week it expected the rupee to close 2008 at Rs52.