The Indian rupee rose on Thursday to its highest level against the dollar this year as strong buying from foreign investors sent shares to a record high and data showed the country's current account deficit continued to narrow sharply. India's benchmark BSE index hit a record high while the NSE index closed just off its all-time high, as foreign investors on Wednesday extended their buying streak to a 14th consecutive day for a net of about $900 million.
"To take a view that INR will continue to gain is wrong," said Samir Lodha, managing director at QuantArt Market Solutions. "The CAD (current account deficit) is in control thanks to the ban on gold imports and capital flows are steady due to the global stability. But any political or economic issue anywhere and we can start to see capital outflows," he added.
The partially convertible rupee closed at 61.11/12 per dollar compared with 61.75/76 on Wednesday. The unit rose as high as 61.10, its strongest since December 10. The rupee rose 1 percent on the day, its biggest single-day gain since November 18. In the offshore non-deliverable forwards, the one-month contract was at 61.44 while the three-month was at 62.13.
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