MUMBAI (Reuters) - The rupee strengthened through 50 per dollar to six-week highs as another strong rise in the stock market boosted hopes of a sustained return of foreign flows, but trimmed its gains as refiners bought dollars.
The partially convertible rupee closed at 50.04/05 per dollar, off an early high of 49.88, its strongest since late February and 0.6 percent stronger than Thursday's close of 50.33/35.
Markets were closed on Friday for a holiday and will shut again on Tuesday for a religious festival.
"There was heavy import-related dollar buying seen in the market, but gains in shares helped the rupee," the chief dealer with a state-run bank said. "Rupee will continue to rise if equities stay bright".
Indian shares rose 1.8 percent taking their gains in April to 8.5 percent and the market to its highest close in five months, as stocks rallied across the world on hopes the worst of economic downturn had passed.
A sustained rally in shares could pull in more foreign investments and help the rupee. However, foreign funds have sold a net $1.4 billion of shares so far this year, after dumping more than $13 billion in 2008.
Dealers said oil refiners bought dollars as global crude rose towards $53 per barrel on expectations the global economy may soon turn. Oil is India's biggest import and refiners are the biggest buyers of dollars in the market.
India's central bank governor said on Monday he expects the current account deficit to widen in fiscal 2009/10, which started on April 1.
Source : REUTERS INDIA