The Indian rupee headed back towards last month's near-decade high on Monday, as dealers bought the local unit in anticipation of a wave of overseas investment flows, spurred by gains in the stock market. The partially convertible rupee breached the psychological 39.50 per dollar mark to end at 39.49/50, strengthening from the previous finish of 39.62/63.
It hit 39.16 last month, its highest since March 1998, but had since weakened under pressure from suspected central bank intervention and foreign selling of local stocks.
"The absence of the central bank today allowed the market to take the rupee higher," said a senior dealer with a private bank. Dealers said there was light demand for dollars from an oil company, but the central bank did not intervene as it has been suspected of doing almost daily last week.
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