Mumbai: The rupee on 21 May 2007 ended at 40.67/68 against the US currency after hitting a fresh nine-year high of 40.53/55 in early trade, following China’s revision of trading band for yuan versus dollar.
The rupee surge was largely prevented by strong dollar demand from a leading oil refinery.
In volatile trade at the interbank foreign exchange (forex) market, the rupee traded in a wide range of 40.53 and 40.77 after resuming weak at 40.74/76 a dollar. It had closed at 40.70/71 a dollar on 18 May.
The Indian currency rallied sharply during morning trade and touched 40.53 level as it gathered momentum on a decision by Chinese authorities to widen the trading band on the yuan and to raise domestic interest rates, forex dealers said.
Th rupee, however, later beat a hasty retreat and lost large part of its gains due to heavy dollar demand by the petro-giant Reliance Industries after the mid-session, said a leading dealer with a private bank.
News of yuan’s greater flexibility and the Chinese rate hike spurred Asian currencies to gain against the greenback, reducing any possibility of intervention by the Reserve Bank of India, forex dealers added.
The rupee was well-supported by a rally in equity markets across Asia. The benchmark Sensex ended 115 points higher on sustained FII inflows.