Tracking the moves in the local equity market, the partially convertible Indian currency traded in a range band between 40.29 and 40.72 per dollar amid high volatility in the interbank foreign exchange market, dealers said. The depreciation of the US Dollar against other global currencies also supported the local unit to appreciate, dealers asserted.
Dealers attributed the firm move of the Indian unit against the greenback to sharp fall of dollar in the international market.
However, they were not confident that the rupee would further strengthen and said the present gain was short-term and temporary.
They were of the view that the global market is expected to be volatile for the next couple of months as the Asian markets as well as the local market is passing through a correction phase.
Last week, the Indian bourses had hit six month's low as the global market melted on rising worries of financial recession and ongoing sub-prime crisis extending impact on other global markets.
Though the Indian unit gained against the dollar, there was a thin demand as well as supply of dollars in the forex market during most of the sessions of the week, a senior dealer with a leading private bank said.
Further, the high inflation and a low industrial production growth would also impact the Rupee's movement against the dollar, he added.