Rupee breaches 40-mark, strengthens to 39.95/$

The rupee appreciated strongly against US currency in morning trades today to rule past 40/$ first time in more than nine years as overseas investors pumped funds in Indian capital market to get high yields.

After the cut in US interest rates the outlook for assets like the Indian currency has increased and foreign investors have made heavy purchases in Indian equity, a forex dealer with the public sector bank said.

The rupee was ruling at 40.1418 yesterday on out of market trades yesterday after closing at 40.20/$, he said.

According to data available on Clearing Corporation of India website the partially convertible rupee was at 39.95/$ after having strengthened to as much as 39.88/$ - a level it last traded in May 1998 - before giving up some of its gains.

The market was underpinned by expectations for higher capital flows into record-setting stocks. The foreign banks which are flush with US currency have sold dollar in market to buy rupee assets, dealer said.