Spot rupee opens 9 year high at 40.60 per USD

Mumbai, May 7: The spot rupee today opened nine year high at 40.60 against per US dollar, dealers said here.

The Indian rupee struck a nine-year high against the dollar on Monday as investors felt confident that the central bank would not intervene to limit its gains, with sentiment also boosted by gains in Asian currencies.

Later, the partially convertible rupee was at 40.59/60 per dollar, off an early peak of 40.53, its highest level since May 1998. It ended at 40.8450/8600 on Friday.

The rupee has gained over nine per cent this year, boosted by robust capital inflows into the fast-growing economy.

The central bank bought USD 19.7 billion in the four months to end-February in a bid to stem the rupee's rise, but it has not been a major presence in the market recently.

The heavy intervention had increased money supply and added to price pressures at a time when the RBI was tightening policy to rein in credit growth and lower inflation, which has led to the market belief that further intervention was unlikely for now.

The rupee also found support after the dollar slipped against the yen and most Asian currencies after a soft payrolls report reinforced expectations the Federal Reserve would lower interest rates later this year.

Meanwhile, the rupee appreciated further and strengthened past the psychological barrier of 41 at 40.85/87. Despite dollar absorption by oil companies and 1.2 per cent fall in Sensex, rupee remained unaffected as the unit inched closer towards its 9-year high, buoyed by strong investment inflows and lack of interference by PSU banks in the currency market, dealers added.

UNI