The Indian rupee climbed to its strongest finish in over a week on Friday as investors poured funds into the record-setting stock market, brushing off concerns about new investment restrictions on unregistered foreigners.
The partially convertible rupee ended at 39.445/455 per dollar, rising smartly from Thursday's close of 39.55/56, with its gains moderated by importer demand for dollars and some sporadic central bank intervention.
The rupee hit 39.27 earlier this month, its highest since March 1998. Foreign buying of equities has been a key driver of its gains of more than 12 percent this year.
"There were immense flows today, which is why the rupee closed above 39.50, despite efforts to stop it by the central bank," said a senior dealer with private bank. "The market has digested the news from the regulator, and the consensus seems to be that at worst, flows are going to moderate a bit," the dealer added.