Rupee extends gains, stronger against US dollar

MUMBAI: Rupee continued to gain for the third straight session and breached 41 level against the US dollar on Wednesday on buoyant equity markets and expectations of revival in capital inflows.

In active trade at the Interbank Foreign Exchange (forex) market, the local currency resumed better at 41.06/08 a dollar from Tuesday's close of 41.08/09 a dollar and later jumped to 40.98 level before being quoted at 41.00/41.01 in late morning deals.

Crediting strong rupee sentiment to a rally in equity markets this morning, forex dealers said exporters are expected to press dollar sales if the Indian unit continues its upward march during the day.
   
The benchmark Sensex on Wednesday moved up by over 178.5 points in early trade on the Bombay Stock Exchange to touch 14,167.61, while the wide-based National Stock Exchange's Nifty recovered by 49.25 to 4,124.15.

Rupee has bounced by about 36 paise since Friday.
    
Traders, however, saw strong support for the rupee at the 41 level and said the currency is expected to rally sharply once this support level was broken after re-emergence of the capital inflows.

Presently, foreign institutional investors (FIIs) are engaged in negative activity in view of the on-going turmoil in global markets.

According to a senior government official, the recent fall in rupee value was temporary and it could again appreciate to touch a level of 38-39 to a dollar.