Rupee up on weak dollar, expected stock gains

Rupee up on weak dollar, expected stock gains

Mumbai: The Indian rupee climbed towards its highest in more than nine years on Monday as dealers anticipated foreign buying of local stocks and after the dollar plumbed new lows against the euro and a basket of currencies.

Traders were wary that the central bank would intervene to cap the rupee, which it has been widely suspected of doing in recent weeks.

At 9:30 am, the partially convertible rupee was at 39.73 per dollar, rising from Friday’s finish of 39.8450. It hit a high of 39.62 last week, its strongest since April 1998.

“With most Asian indices in the positive today, it looks like the inflows are going to be aggressive," said a senior dealer with a foreign bank.

Asian stocks rose on Monday, which augured well for sentiment on local equities and expected foreign buying, dealers said.

India’s benchmark share index rose to a record high for the eighth straight session on Friday. Data shows foreign funds bought $2.8 billion in the seven days to last Thursday.

Some Asian currencies also saw strong gains after weakness in US inflation data renewed selling pressure on the dollar, giving a further boost to the high-yielding rupee, which has gained more than 11% this year.

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.