The Indian rupee closed at its highest level in a month on Monday, as exporters, including large software companies, repatriated profits, though gains were capped by an oil refiner that bought dollars through the day. The rupee ended at 40.65/66 per dollar, off its intraday peak of 40.60 but at its highest finish since June 5. It had closed at 40.70/71 on Friday.
"Trading was muted today, so the rupee's gains may be slightly misleading," said a dealer with a private bank. Dealers said the absence of settlements due to the Reserve Bank of India's year-end closing had resulted in subdued trading. A slew of large exporters pared dollar holdings, because they found the levels attractive, driving up the rupee, dealers said.
Capital inflows into the fast-growing economy also lent support to the local unit. The rupee has gained nearly 9 percent this year, helped by surging investment flows into Asia's third-largest economy.
The rupee hit a nine-year peak of 40.28 in late May, but was knocked back by suspected central bank intervention. The central bank is widely seen as having an active hand in keeping the rupee weaker than 40.70 over the past three weeks. Concerns over provoking further intervention kept some traders from building large positions in the rupee.