The rupee climbed 0.1% to 45.5125 against dollar at the close of Thursday trade, bolstering the currency?s gains this year to 2.2 %.
India?s financial markets were closed On Wednesday for a local holiday. Rupee had ended at Rs 45.51 per dollar compared with Rs 45.59 per dollar on Tuesday. Rupee rose for a second day on optimism gains in the benchmark share index will spur overseas investors to increase holdings of local equities from an all-time high, dealers said.
The currency advanced to its strongest level this week as the Bombay Stock Exchange?s Sensitive Index added 0.6%, taking gains in the past year to 82%. Foreigners raised total ownership of local stocks to a record high $76.2 billion on March 22, data from Sebi showed. The rupee also rose as a gauge that measures the dollar?s strength retreated from near a 10-month high.
?Lured by rupee?s attractive level, all exporters were seen selling dollar, which added to the local unit?s rise today,? said KN Dey, director, Basix Forex & Financial Solutions.
The rupee will appreciate in long term. In the near term, if rupee breaks technical support at 45.30/$1, it would rise up to 44.80, Dey added.
?The rupee recovered from an early decline as stock-market gains helped boost the sentiment? on the currency, said Roy Paul, deputy general manager at Federal Bank Ltd.
The current 10-year benchmark 6.35%, 2020 paper settled at 7.8809% yield, down from 7.84% recorded on Tuesday?s close. Government bonds yields were down because most traders chose to trim holdings ahead of the announcement of the government?s market borrowing plan for the first half of 2010-11. ?The traders are wary of holding on to positions as they expect to get supply-related cues only Monday,? said a dealer.