The rupee extended gains for the fifth straight session today and closed nine paise higher at 61.04 against the dollar on sales of the US currency by exporters and banks amid heavy capital inflows.
Some weakness in the dollar overseas helped the rupee rise to a four-month high, while a fall in local equities capped the gains, a forex dealer said.
The rupee resumed strong at 60.98 a dollar from the previous close of 61.13 at the interbank foreign exchange market and touched a high of 60.97.
However, it fell to a low of 61.30 in line with the drop in domestic stocks only to bounce back on strong foreign fund inflows in equities and continued dollar sales by exporters. It settled at 61.04, a gain of nine paise or 0.15 per cent.
In five straight sessions, the rupee has flared up by 132 paise or 2.12 per cent and it is now at the highest level since August 8.
The 30-share BSE Sensex declined 71.16 points amid profit booking after climbing to a record high yesterday. The stock rally was fuelled by the main opposition BJP's wins over the Congress in three state elections.
Overseas investors bought a net Rs 2,473.17 crore of shares yesterday, according to provisional data with the stock exchanges.
"Rupee resumed higher on initial selling of dollars by banks and exporters. However, the rupee lost the initial gain, taking cues from local equities, which traded negative throughout the day," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
Rating agency Fitch today said the setback faced by the Congress Party in state elections could potentially raise political pressure on the government's near-term fiscal goals. It could mean an increasing likelihood of political pressure to limit expenditure cut-backs.
