Rupee trades at 40.80/83 against USD

Mumbai, May 15: The Indian rupee today rose further from the previous close of 40.87/88 per dollar to trade at 40.80/83 in the morning session.

Market observers said the rupee was appeared to be returning to its recent nine year heights as investors bought the currency to take advantage of firm call money rates caused by a cash squeeze in the money market.

However, investors were wary of building large positions in the rupee for fear of provoking intervention by the Reserve Bank of India (RBI).

At 0945 hrs the partially convertible rupee was at 40.80/83 per dollar, ticking up from Monday's close of 40.87/88. The rupee had touched 40.53 early last week, its strongest since May 1998.

The rupee was bolstered as investors sold dollars for the domestic unit to tide over a squeeze in the money market. Call rates were trading at 9.00-9.25 per cent on Tuesday, higher than around 6 per cent when cash supplies are adequate.

The Central Bank bought USD 2.3 billion in March, taking its dollar purchases to USD 22 billion since the start of November 2006, dealers said.

The rupee has gained more eight per cent this year, powered by strong capital inflows into the fast-growing economy.

UNI