The Indian rupee moved up on Thursday on foreign investment flows and as exporters repatriated profits, but the central bank intervened to thwart the gains, dealers said. The partially convertible rupee ended at 40.71/72 per dollar, moving up from Wednesday's 40.75/76.
It has been trading in a rough 40.50-41.25 range since the central bank knocked it from a nine-year high of 40.28 in late May. "It was a tug of war today: the flows were pretty decent but the RBI was absorbing," the chief dealer with a foreign bank said, referring to the Reserve Bank of India.
Dealers said state-run banks aggressively bought dollars near 40.72, which they suspected was on behalf of the central bank. Dealers said foreign investor demand for a $2.1 billion domestic share sale by ICICI Bank had underpinned the rupee, and that the prospect of a fresh wave of foreign investments was boosting sentiment.
The domestic leg of the sale by ICICI to raise up to $4.9 billion in India and in the United States was covered in less than an hour on Tuesday. Bids can be submitted until Friday. The rupee has gained about 8.5 percent against the dollar this year, to be Asia's best performing currency against the dollar, driven higher by robust foreign investment flows.