The Indian rupee moved up on Thursday, as investors bought the local unit on expectations that a possible rate cut by the US Federal Reserve would draw capital inflows into the fast-growing economy, dealers said. The rupee ended at 39.75/76 per dollar, strengthening from the previous finish of 39.80/81.
It hit a near-decade high of 39.16 earlier this month, but has weakened since under pressure from central bank intervention and capital outflows from the stock market.
Indian Finance Minister Palaniappan Chidambaram said on Thursday that there were some upsides and downsides to a strengthening rupee, which some dealers took as a positive signal for the local unit.
"The statement from the finance minister has to be viewed positively, because everyone already knows the downside effects of a rising rupee," said a senior dealer with a corporate. Dealers took positions in the rupee in anticipation of a wave of capital inflows if the Federal Reserve cuts rate next month as expected.