The Indian rupee climbed to its strongest level against the dollar in 9-years on Thursday as foreigners continued to pour funds into the booming economy, but suspected central bank intervention drove it off its peak.
The partially convertible rupee rose just over 0.5 percent to 39.36 per dollar, its strongest level since March 1998, but closed at 39.49/50, above Wednesday's finish of 39.575/585. "Flows, flows, flows - they just keep coming," said a senior dealer with a private bank.
Dealers said that despite the benchmark share index snapping an 11-day rally, overseas funds continued to invest heavily in Indian stocks, which boosted the rupee. Dealers said that some large exporters also pared their dollar holdings when the rupee broke 39.50, on concerns that the rupee was going to appreciate further in the near term.
The rupee's rise was blocked by suspected central bank intervention, traders said. The central bank bought $38.1 billion in the first seven months of 2007 in a bid to cap the rupee.