Rupee touches fresh 9-year high

The Indian rupee appreciated to Rs 39.83/84 against the dollar in early trade following a rally in equity markets amid heavy capital inflows.

In active trade at the Interbank Foreign Exchange market, the rupee opened strong at Rs 39.85/86 up by $1 from last Friday's close of Rs 39.90/91 and improved further to Rs 39.83/84. It touched a new nine-year peak of Rs 39.785, a level not seen since May 1998.

The Indian currency got support from the strong rally in equity markets where the benchmark Sensex was up by another 256 points to a new peak of 16,820.53 in morning trade. Heavy capital inflows also boosted buying sentiment. Foreign Institutional Investors remained net buyers last week, pumping in nearly $2 billion in the current so far and over $10 billion in the year 2007 till last week.

After the US interest rate cut, foreign investors preferred to invest in high yielding currencies like rupee. Expectations of the central bank's intervention weighed on the rupee last Friday. But there was not much intervention from the apex bank and not much dollar demand from oil refiners as the global crude oil prices remained high at nearly $82 a barrel, slightly lower than the record $84 a barrel touched last week.

Rupee has appreciated nearly 1.5 per cent in the last three sessions after a hefty US rate cut last Tuesday. Meanwhile, exporters mount pressure on the government to bail them out of the crisis triggered by the rupee rising to sub-40 level against the dollar, while demanding immediate RBI intervention to curb the rise of the Indian currency.