Mumbai: Rupee strengthened on Monday as share market gains in Mumbai and elsewhere in Asia raised expectations that foreigners would resume buying local shares, though concerns about central bank intervention weighed.
At 9:45 am, the rupee was at 39.605/610 per dollar, moving up from Friday’s finish of 39.71/72, its weakest since 23 October. It 39.16 earlier this month, its highest since March 1998.
“We’re likely to trade in a range today, but it all depends on where the central bank wants to take the pair,” said a senior dealer with a foreign bank who expected the rupee to trade in a 39.55-39.65 range on Monday.
The Indian stock market was up 2% at 0450 GMT, and Asian stocks were also up after investors were encouraged by a robust start to the US holiday shopping period.
Dealers said the buoyancy in stocks lifted sentiment among currency investors, but fears of a US slowdown persisted.
Foreigners have sold more than $1 billion worth of Indian shares so far this month, after buying $4.3 billion in October, trimming their net buying to $16.1 billion so far in 2007.
The market also expects some foreign funds to repatriate profits before the end of the year.
Adding to the caution, dealers are wary about making big bets on a stronger rupee because of the risk of central bank intervention.
The Reserve Bank of India bought nearly $52 billion in the first nine months of 2007 in a bid to temper the rupee’s ascent, and traders said it has been active in October and November.