The rupee firmed to a fresh three-month high on Thursday morning, boosted by persistent speculation of a yuan revaluation and news India proposed scrapping a voting rights cap in private-sector banks. At 9:45 am (0415 GMT), the rupee was quoted at a 43.4550/4625 per dollar, its strongest since hitting a five-year high on February 3, after opening at 43.4700/4800. The unit had closed at 43.49/50 per dollar on Wednesday. Traders said talk that China would eventually revalue the yuan remained even though China's finance minister said speculation made it hard for currency reform right now.
"Basically the comments (from China) indicates that the yuan revaluation will happen sometime later, if not now. So the market has taken it positively," said a dealer at a state-run bank.
Speculation over a possible yuan revaluation has helped lift the rupee and other Asian currencies over the past two weeks.
"We will actively and prudently push forward this reform but I believe under the current situation that speculation on the renminbi (yuan) exchange rate is very hot and that pushing forward this reform is very difficult," Chinese Finance Minister Jin Renqing said on the sidelines of the annual meeting of the Asian Development Bank in Istanbul.
India's government approved a proposal late on Wednesday to scrap a 10 percent voting rights cap in private sector banks, a move which analysts said would attract more foreign investment into local banks. The proposal now has to be approved by parliament and communist parties which support the coalition government in parliament say they will vote against the plan.
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