The Indian rupee inched higher on Friday, bolstered by gains in local stocks, though concerns about central bank intervention weighed, dealers said. At 10:20 am (0450 GMT), the partially convertible rupee was at 39.492/502 per dollar, moving up from the previous finish of 39.535/545.
"The rise in stocks should attract some overseas interest, but fears that the central bank will move against the rupee are present," said a dealer with a foreign bank.
Trading activity in Asia was muted due to the Lunar New Year holidays in most of the region, with markets in China, Hong Kong, South Korea, Taiwan, Singapore, Malaysia, and Indonesia closed until next week.
The holidays crimped trading volumes in India's currency market, dealers said. India said on Thursday that it expects economic growth at 8.7 percent in fiscal 2007/08, slower than the previous year's rate of 9.6 percent, as higher interest rates dent consumer demand. Dealers remained watchful for signs of central bank intervention against the rupee.
Till this week, the Reserve Bank of India has widely been seen as playing an active role in capping the rupee's rise. The central bank bought $72.1 billion in the first 11 months of 2007.
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