By IANS
New Delhi : The Indian rupee today climbed to a nine-year high as it breached the previous high of 39.44 to post 39.27 against a dollar.
The rupee rose to 39.27 per dollar in intra-day trading, breaching the psychologically crucial 39.50 rupees-to-a-dollar mark for the first time since May 1998.
The Indian currency’s closing, the highest since June 1998, was also boosted by absence of any intervention by the Reserve Bank of India (RBI) and dollar demand from oil companies.
The rupee has appreciated more than 12 percent against the dollar so far this year as global investors have flocked to India, where the economy is growing about 9 percent annually and the stock market has been climbing to new highs.
“We expect the rupee to stabilise at current levels. We expect that RBI credit policy will be more on a balancing act of inflow and outflow of funds,” said Deepak Guwalani, director, Aov Forex, a Noida-based currency trading firm.
“Margins of many small scale exporters have been hit but now they are also seeking professional advice to hedge their margins,” he added.
Dealers said that dollar flows into the stock market were expected to be strong, which would further lift the rupee. Overseas buying of local shares is been a key driver of the rising rupee.
The dollar came under heavy selling pressures following tenuous US economic data that showed companies cut 4,000 jobs in August, the first such fall in four years.
The market is expecting US Federal Reserve to cut interest rates next week as the US economy shows signs of adverse effects from the credit market turmoil.
Still, local dealers are not buying dollars on concerns that RBI would intervene against it to limit rupee gains.