MUMBAI (Reuters) The rupee rose to its highest level in 1-½ months on Monday as early gains in local shares raised expectations of capital inflows that would support the currency, with sentiment also underpinned by gains in other Asian currencies.
Markets were shut on Friday on account of Good Friday and will be closed on Tuesday again for a local holiday.
"The gains in stocks and other Asian currencies is helping the rupee, but the 49.85-89 support for the dollar is under test now, which if it sustains then further gains are unlikely," a senior dealer with a private bank said.
"But if this support is broken, rupee could then head off to 49.50-49.20 in the near-term, with an immediate appreciation towards 49.65," he added.
Indian shares rose strongly in opening trade, extending gains into a seventh straight session, as increased hopes for a recovery in the global economy bolstered investor confidence.
Foreigners have been net buyers of $262 million worth of shares in April, but are still net sellers of about $1.2 billion so far in 2009, on top of more than $13 billion in sales last year. However, sustained inflows are seen as positive for the rupee.
Most Asian currencies were higher against the dollar.
Dealers said there was good two-way interest seen in the market with importers buying dollars at dips.
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