Rupee gains 20 paise against USD during the week

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Mumbai, Dec 8:The Rupee gained more than 20 paise against the American greenback on sustained capital funds inflows amid high volatility in Indian equity market during the week.

The partially convertible Indian unit ended firm at 39.40/41 per dollar on Friday on a firm note. Moreover, the Rupee fluctuated in a wide range of 39.38 and 39.62 per dollar on the sentiments prevailing in the Indian bourses throughout the week, dealers said.

The local unit has appreciated about 10 per cent in the last seven months and 15.1 per cent on year-on-year basis till October 31, as compared to October 2006.

Further, it is expected that their might be a fresh rise in capital inflows in Indian as well as Asian market after the proposed cut in rates by US Federal Reserve after its meeting scheduled on December 11. The Rupee can move upwards and touch even the level of 39.00 per dollar, said a senior dealer with a leading private bank. ''However, it is expected that the Reserve Bank of India (RBI) intervention will continue to arrest the Rupee's appreciation,'' the dealer added.

The government has expressed its concern over viability of existing methods to control capital inflows and stressed for innovative policy responses to stem the short-term capital inflows.

Overseas funds have been a key driver of the Rupee's more than 12 per cent rise this year, leading it to be among Asia's best-performing currencies against the dollar this year.

Foreign Institutional Investors (FIIs) have started turning up to invest in Indian bourses this month after remaining cautious last month when they pulled out about USD 1.1 billion.

UNI

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