The Indian rupee recovered intraday losses to end stronger on Friday, as capital inflows offset dollar demand from oil refiners and suspected intervention from the central bank, traders said. The rupee ended at 40.86/87 per dollar, up from Thursday's close of 40.94/95 and an intraday low of 41.01. The rupee hit a nine-year peak of 40.28 in late May.
"The central bank intervened around 40.96 levels, but this did not seem to have worked," a foreign bank trader said, adding there were aggressive dollar sales by companies towards the end of trade.
The rupee weakened during the session on dollar buying by oil firms to fund import payments. Deputy central bank governor Rakesh Mohan said in a paper released on Thursday that large inflows could result in overvaluation of the rupee and erode competitiveness of traditional and goods sectors in the long term.
The central bank bought $2.06 billion through intervention to keep the rupee in check in April, taking its total purchases to $24 billion for the six months from November. It is widely suspected of selling rupees over the past month to keep the dollar above 40.50 rupees.
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