Mumbai: The rupee closed at a new nine-year peak of 40.28/29 against the US dollar on 23 July, on the back of sustained capital inflows amidst weak dollar overseas.
In active trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened remarkably lower at 40.37/39 a dollar from previous close of 40.3200/3250.
Later, the rupee got strong support at lower levels and bounced back to settle at 40.28/29, a gain of nearly four paise over the previous close.
The previous nine-year high was 40.3200/3250 per dollar, recorded on 20 July.
Dealers attributed early fall in the rupee to dollar buying by importers and oil refinery companies to meet their import requirements.
The global crude oil prices remained high over $75 a barrel, which may put pressure on the rupee as oil companies will buy dollars to make payments for imports.
India fulfills nearly 70% of its oil demand through imports.
The Reserve Bank of India (RBI) also intervened at the level of 40.23 to protect the exporters’ competitiveness.
Sustained capital inflows of nearly $5.4 billion in last 15 days and $9 billion in the current year, mainly boosted the rupee sentiment, analysts said.
According to them, the upside in the rupee may be capped in near future due to possibility of intervention of the apex bank, slow down in the capital inflows due to recent sharp surge in the Sensex and higher crude oil prices.