The Indian rupee inched up on Thursday, bolstered by rising stocks and regional currencies that gained ahead of next week's Group of Seven meeting, but customary month-end dollar demand capped gains, dealers said. The rupee ended at 43.7800/7900 per dollar, up only slightly from Tuesday's 43.7850/8000 close. Banks in India's financial capital, Bombay, were shut on Wednesday for Republic Day.
"There was some dollar demand from state-run companies," said a chief dealer at a private sector bank. "The month-end purchases checked gains by the rupee, despite the rise in the stock market."
A steady decline recently in overseas investment in India's stock market has sparked worries that the rupee could come under pressure. Foreigners sold a net $36 million of shares on Friday, on top of sales of $20 million in the previous two sessions.
They have now pulled out nearly $47 million in January, after buying a record $8.5 billion worth in 2004, helping the rupee gain nearly 5 percent.
Growing uncertainty about firm oil prices and whether China will revalue its currency soon also drove activity, dealers said.