Rupee stronger by 34 paise at 40.79/80 a dollar

MUMBAI: The rupee on Monday strengthened by 34 paise at 40.79/80 against the US currency, largely due to anticipated capital inflows through the IPO route.

The Indian currency had closed at Rs 41.13/14 per dollar on Friday.

After a sharp correction of about 1.5 per cent in the last four trading sessions, the local currency bounced back with a vengeance on the opening day of the real estate major DLF Ltd's USD 2.4 billion Initial Public Offering (IPO).

In volatile trade at the Interbank Foreign Exchange (forex) market, the rupee moved widely in a range of 40.7850 and 41.0600 after resuming strong at 40.96/98 a dollar.

The rupee surged strongly after the correction as the market was long in dollars, according to traders.

Attributing the rupee's dramatic fall on Friday to dollar buying by state-owned banks, probably at the behest of the central bank, forex dealers said the Reserve Bank of India (RBI) was believed to be selling the rupee to prevent it from breaching the 40.50 level.

Foreign inflows into the Indian equity markets are expected to reach a record high of over USD 15 billion in the 2007 calendar year due to a line-up of multi-billion-dollar share offerings.

After the DLF Ltd's IPO, the proposed public issues by India's largest banks, State Bank of India and ICICI Bank are expected to fetch sizeable forex inflows so boosted the rupee sentiment, a banker commented.