Foreign funds push Re to another 9-yr high

The rupee wiped out initial losses and appreciated further by 3-paise to close at 39.7350/ 7450 against the dollar on the back of heavy capital inflows. In fairly active but two-way trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened weak at 39.80/81 per dollar from Monday’s close of 39.7650/ 7750 per dollar and moved down further to 39.84 a dollar.

Dealers attributed the early fall in the rupee to hesitancy in the equity markets till mid-session, when the benchmark Sensex was down by nearly 169 points, and stray month-end dollar demand from oil refiners. Some dollar buying by state-run banks on behalf of the apex bank to stem the domestic currency’s surge to protect exporters’ competitiveness also weighed on the rupee.

But a smart recovery in the stock markets on the back of heavy foreign funds inflows pushed the rupee up to a new 9-1/4 year peak of 39.73 a dollar before settling for the day at 39.7350/ 7450 per dollar, a level not seen since April 30, 1998 when it was ended at 39.74 a dollar.