Mumbai: The rupee ended at day’s high on Thursday, boosted by gains in Asian peers, strong capital inflows and weak dollar overseas.
The partially convertible rupee ended at 46.47/48 per dollar, after moving in a wide 46.4700-46.6050 band, up 0.34% from Wednesday.
Further rise in the rupee was prevented by dollar demand from some oil importers, dealers said.
“Rupee is following emerging market currencies now. In the short-term, I expect the rupee to strengthen because capital flows continue to be strong into India,” said Ajay Mahajan, managing director and head of financial markets and institutional banking at UBS.
So far in 2010, foreign funds have invested a net $13.5 billion in shares, in addition to last year’s record $17.5 billion investment when the rupee had risen 4.7%.
“Speculative position is light on both short and long side. Corporate position is also very short-dated,” Mahajan said.
He expects the rupee to touch 46.40 a dollar in the next two trading sessions and sees the next resistance at 45.80/90.
“Rupee seems to be on a firm footing with all the global recovery worries. Investors want to bet on emerging economies including India,” said a dealer at a foreign bank.
Asian currencies also traded higher. The Korean won reached a fresh one-month high despite the central bank’s surprise decision to leave interest rates on hold.
Indian shares had their best week in six months, rising 0.7% to their highest close in almost 32 months on Thursday as rapid growth expected in Asia’s third-largest economy drew investors.
The yen hovered near a 15-year high against the dollar on Thursday as conflicting messages from policymakers prompted traders to bet Japanese authorities were not yet ready to intervene.
The index of the dollar against six major currencies was marginally up 0.01%.
One-month offshore non-deliverable forward contracts were quoted at 46.59, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at 46.5750 and 46.58 respectively and total volumes traded was $5.2 billion.