Rupee at one-week high

Rupee at one-week high
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First Published: Tue, Jun 19 2007. 11 25 AM IST
Updated: Tue, Jun 19 2007. 11 25 AM IST
Reuters
Mumbai: The Indian rupee climbed to a one-week high on 19 June, with sentiment bolstered by a sanguine outlook for foreign investment flows, but suspected central bank intervention capped the rupee’s gains.
At 9:50am (0420 GMT), the rupee was at 40.715/725 a dollar moving up from 40.7725/7825 the previous day. The Indian currency had hit a nine-year high of 40.28 hit in late May, but has since been broadly trading in a 41-40.50 band.
“The market tried to test the RBI early today, but was stopped once again,” said the chief dealer with a corporate, referring to the Reserve Bank of India.
“We’re waiting for the inflows, which should be in the positive, and to see how the RBI reacts again,” added the dealer who expects the rupee to trade in a 40.65-40.75 range on 19 June.
Traders said the rupee found support from high-yielding Asian currencies like the Indonesian rupiah, which strengthened against the dollar, an indication of a pick-up in investors’ appetite for relatively risky assets, including the rupee.
The rupee has gained about 8.5% against the dollar this year, powered by strong capital inflows making it Asia’s best performing currency.
The RBI bought $2.06 billion through intervention to keep the rupee in check in April, taking its total purchases to $24 billion for the six months from November. It is widely suspected of selling rupees over the past month to keep the dollar above Rs40.50.
Still, traders said the central bank would be cautious about intervening too heavily, on concerns of fuelling money supply in the fast-growing economy.
Overnight interbank loan rates were trading at 2-2.25% on 19 June, an indication of a surfeit of cash in the banking system. Call rates trade at around 6-7% when cash supplies are normal.
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First Published: Tue, Jun 19 2007. 11 25 AM IST