Mumbai: The rupee moved away from nine-year highs on Friday, 28 September, weighed by concerns overseas funds might repatriate profits from the surging stock market, and that the RBI would intervene against the local unit. At 9:45am (0415 GMT), the rupee was at 39.81/82 a dollar, slipping from 39.71/72 at close on Thursday when it hit a high of 39.62 in early trade — its strongest since April 1998.
“The pace at which stocks have risen is making people a bit jittery, and the central bank has shown strong resolve in keeping the rupee down,” said a dealer with a private bank.
Several banks were seen covering short positions in the rupee in anticipation of a slight correction, the dealer added.
India’s benchmark share index rose to a record high for the eighth straight session on Friday, taking gains to about 11% in nine days.
Data shows that overseas investors pumped in nearly $2.2 billion into local stocks in the six days after last Tuesday’s rate cut by the Federal Reserve.
Capital inflows into local stocks have helped the rupee appreciate more than 11% this year, to be Asia’s best performing currency against the dollar.
The rupee’s rapid ascent has spurred the central bank to intervene against it, and the market widely believes the Reserve Bank of India will make a concerted effort to see the rupee does not appreciate past 39.60 in the near term.
Data shows the central bank bought $38.1 billion in the first seven months of 2007 in a bid to stem the currency’s rise.