MUMBAI: The Indian rupee climbed to its strongest level in nearly two weeks on Tuesday, the first session of the new financial year 2012/13, bolstered by bunched dollar inflows after a three-day weekend.
The currency, which fell 12.35 percent in 2011/12, was helped by improved outlook for risk taking after strong manufacturing data from the United States and China, traders said.
However, the rupee is unlikely to make much headway because of a widening current account deficit. India's balance of payments fell into negative territory in the December quarter for the first time in three years.
At 10:18 a.m. (0448 GMT), the rupee was at 50.57/58 to the dollar, after touching 50.51 in early trade, a level last seen on March 21 according to Thomson Reuters data.
It closed at 50.87/88 on Friday, the last day of the fiscal year 2011/12 during which it hit a record low of 54.30 on Dec. 15.
"Good amount of inflows are there," said a currency trader with a foreign bank. "There is support for the dollar around 50.40 and we could see a move back to 50.80."
Nonetheless, not much volatility is expected this week because of a spate of market holidays. Trading was closed on Monday for annual closing of bank accounts and the market is shut on Thursday and Friday for local holidays.
The one-month offshore non-deliverable forward contracts were at 50.99.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange were all around 50.82, on a combined volume of $509 million.
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