The Indian rupee hit a 9-1/2-year high on Thursday as record-setting shares encouraged capital inflows, but suspected central bank intervention knocked the currency off the peak, traders said. The partially convertible rupee ended at 39.3000/3050 per dollar, off an early high of 39.27 - its highest since March 1998.
It had closed at 39.3150/3250 on Wednesday. "State-run banks were buying dollars through the session. We expect the rupee to open stronger tomorrow, but the RBI could hold it around 39.25 levels," a foreign exchange broker said, referring to the Reserve Bank of India. India's main share index hit a record high during trade on Thursday for the 15th time in 16 sessions. Foreigners have bought $2.8 billion of equities this month, taking their net purchases for 2007 to $15.8 billion.
A rising rupee has dented the margins of exporters and Infosys Technologies, India's No 2 software services firm, said on Thursday its full-year margins may fall by 50-100 basis points.
The rupee has risen 12.6 percent in 2007, making it the best performing currency versus the dollar in Asia. The central bank has been aggressively buying dollars in the currency market to help maintain the competitiveness of India's exports. Data shows the central bank bought $38.1 billion in the first seven months of 2007, to cap the rupee's gains.