Indian rupee up, shrugs off intervention fears

MUMBAI — The Indian rupee climbed yesterday as traders shrugged off concerns about a renewed surge in central bank intervention to stem the local unit's gains, betting that strong capital inflows would push it higher.

By (Reuters)

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Published: Fri 10 Aug 2007, 9:52 AM

Last updated: Sat 4 Apr 2015, 9:20 PM

After market hours on Wednesday, the Reserve Bank of India raised the ceiling on market stabilisation bonds (MSS) — used to absorb funds generated by its currency intervention — to Rs1.5 trillion ($37 billion) from Rs1.1 trillion.

At 9:55am (0425GMT), the rupee was at 40.43/44 per dollar, moving up from Wednesday's close of 40.5250/5350. It hit a nine-year high of 40.20 in late July.

"You don't buy a gun and shoot the first thing," said the chief dealer with a foreign bank. "The central bank is only getting the ammunition ready."

The central bank has played an active role in the currency market, buying dollars through state-run banks in a bid to cap the rupee, which has gained about 9.5 per cent this year, driven higher by strong capital inflows into the fast-growing economy.

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