India's rupee eased on Thursday as oil companies bought dollars and as fears of central bank intervention weighed on sentiment, but trading was muted ahead of a public holiday, dealers said. After market hours on Wednesday, the Reserve Bank of India said the limit for issuing intervention bonds had been raised to 2.5 trillion rupees ($63.6 billion) from 2 trillion rupees.
The partially convertible rupee ended at 39.325/335 per dollar, lower from 39.30/31 at the close on Wednesday, when it hit 39.16 - its strongest since March 1998. Markets will be closed on Friday for a public holiday. "Many companies were closed today for Diwali, and there wasn't much happening for most of the day," said a senior dealer with a private bank.
"Apart from some initial jitters, the market seems to have brushed off the increased MSS ceiling," said the dealer, referring to the so-called Market Stabilisation Scheme bonds.
The central bank bought $40 billion in the first eight months of 2007, and is widely suspected of having played an active role in tempering the rupee's ascent in recent months. The rupee has gained about 12.5 percent against the dollar this year, powered by massive capital inflows, many slated for the record-setting stock market.