The Indian rupee climbed on Thursday, buoyed by firming overnight lending rates and as exporters repatriated profits, but gains were limited as traders unwound short dollar positions to book profits.
The rupee ended at 40.83/84 per dollar, rising smartly from Wednesday's 40.9725/9825. It has been trading mostly in a broad 40.50-41.25 range since early May.
"Overseas investors did not sell rupees like they have been for the past few days, which is why it gained as much as it did," said a dealer with a private bank.
Sentiment was boosted after other high-yielding Asian currencies, such as the Indonesian rupiah and the Philippine peso, rebounded after gains in US stocks helped ease concerns about ebbing appetite for riskier emerging market assets.
Firm overnight interbank lending rates further bolstered the rupee. Call rates rose to 8.00-8.25 percent from 6.75-7.00 percent on Wednesday and well above last week's near-10-year low of 0.10 percent. Local exporters, led by a large software services firm, sold dollars aggressively, dealers said, adding that inflows from Sterlite Industries' $1.75 billion American depository shares issue had also started to hit the market.
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