Mumbai: The Rupee headed back towards 9-year highs on 24 October 2007 as dealers anticipated capital inflows into the stock market after concerns eased about the nature of proposed changes to investments using the participatory notes route.
At 9:45am, the partially convertible rupee was at 39.480/485 per dollar, after the previous day’s gain of .75% — the largest gain sinch 3 October. The currency hit 39.27 hit earlier this month, its highest since March 1998.
The gains on 23 October were propelled by a 5% rise in the share market, the largest single-day gain in 16 months.
“The market is positioned for the rupee to rise, but we’re also watching for signs from the the central bank,” said a dealer with a public sector bank, who expects the rupee to trade in a 39.40-39.60 range today.
Dealers said sentiment for the local unit was buoyant as the share market regained confidence after the market regulator had said on 22 October it would speed up clearance procedures for foreign investors.
The Indian rupee has gained over 12% this year, boosted by large portfolio-related investments.
Still, the market remained cautious about taking large positions in the rupee, expecting the central bank to intervene around the 39.40 mark.
The Reserve Bank of India sold as much as $40 billion in the first eight months of the year in a bid to cap the rupee.