(Updates to close)
By C.J. Kurrien
MUMBAI, Nov 5 (Reuters) - Suspected central bank intervention
halted the rupee from hitting a new 9-½ year peak on Monday,
but robust capital inflows would continue to put upward pressure
on the buoyant Indian unit, dealers said.
The partially convertible rupee <INR=IN> ended at 39.31/32
per dollar, driven off an intraday peak of 39.22, its strongest
since March 1998. It ended steady from Friday's close.
"The market is testing the central bank's resolve and with
the sizeable inflows I think we should hit 39.1 by the end of the
week," said V. Rajagopal, chief dealer with Kotak Mahindra Bank.
The rupee surged in late trade after Finance Minister
Palaniappan Chidambaram said the Indian unit was likely to
appreciate further due to strong economic growth.
But aggressive dollar buying by the central bank as the rupee
approached its peak prevented it from climbing to its highest in
nearly a decade, dealers said.
A section of the market remained concerned about capital
outflows on waning risk appetite for relatively risky assets,
which had put pressure on most Asian indices.
Sentiment was hurt after U.S. banking giant Citigroup <C.N>
said it may suffer an $11 billion write-down for subprime losses
and that its chairman and chief executive had resigned. See
[ID:nN01480369].
The news weighed on the local share index <.BSESN> that fell
2 percent.
Overseas investment flows into local equities have helped
lift the rupee by more than 12.5 percent this year.
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MARKET SNAPSHOT
Bombay Sensitive Index <.BSESN>
Indian rupee (/$) <INR=IN>
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((Editing by Ranjit Gangadharan; Reuters Messaging:
[email protected], 91-22-6636 9037))
Keywords: MARKETS INDIA RUPEE/