(Updates to close)
By Anurag Joshi
MUMBAI, Oct 16 (Reuters) - The Indian rupee retreated from
9-1/2-year highs on Tuesday, after record oil prices raised
concerns of a wider trade deficit and traders suspected central
bank intervention to weaken the currency.
The partially convertible rupee ended at 39.345/360 per
dollar, weaker than Monday's close of 39.305/310. Last week, it
had hit 39.27 -- its strongest level since March 1998.
Crude <CLc1> rose to record near $88 a barrel. Oil is India's
biggest import and analysts are concerned that the spike could
deteriorate the trade deficit, which was $32.5 billion in the
first five months of the fiscal year that began in April.
"In the first five months of this fiscal year, the trade
deficit has widened by some 60 percent on the back of rising oil
prices, as well as brisk growth in non-oil imports," Standard
Chartered said in a research note.
The rupee has been the best performing currency in Asia,
rising by about 12.5 percent this year, despite aggressive
intervention by the central bank.
The Reserve Bank of India (RBI) has bought $39.9 billion in
the first eight months of 2007.
"The RBI bought dollars off and on to not let the rupee rise
past 39.30," a state-run bank trader said, adding that a few in
the market fear that a correction in the stock market could put
pressure on the rupee.
The main stocks index <.BSESN> rose to a record high for the
18th time in 19 sessions on Tuesday, but gave up the day's gains
as investors were concerned about expensive valuations.
Foreign funds bought $957 million of local equities on
Monday, taking the total inflow this month to $4.6 billion.
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MARKET SNAPSHOT
Bombay Sensitive Index <.BSESN>
Indian rupee (/$) <INR=IN>
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((Editing by Ranjit Gangadharan; Reuters Messaging:
[email protected]; Tel: +91-22 6636-9035))
Keywords: MARKETS INDIA RUPEE