Rupee gains on inflows

The rupee inched higher on Thursday, supported by capital inflows into the stock market, though dealers said RBI intervention kept a lid on gains.

The partially convertible rupee ended at 39.92/925 per dollar, off an intra-day high of 39.91, but stronger than Wednesday's close of 39.96/97. The currency market will be closed on Friday for a public holiday.

"Today we saw a tight range. Marginal rupee appreciation on the back of good equity market performance but we still continue to see central bank intervention in the lower 39.90s," said the head of trading with a foreign bank.

India's main share index ended 1.46 per cent higher to its strongest close since early March.

In the past week the rupee has moved in a range of 39.89-40.01, and the Reserve Bank of India has repeatedly stepped in to stem the currency's rise.

Annual inflation dipped to 7.14 per cent in early April, compared with a more than three year high of 7.41 per cent in late March, data released on Thursday showed.

But traders said the data had little effect on the currency market, although some still expect the central bank to allow the rupee to appreciate to lower the prices of commodity imports, such as oil.

"I don't think we can read too much into a minor dip in the inflation number this week," the trader said. "It didn't have much of an effect at all."

The trader said that he expects the rupee to trade in a narrow range ahead of the central bank's scheduled policy review on April 29.

"I still am going with a rangebound outlook. The rupee is unlikely to go beyond 39.80," he said.