India Thursday 31 December 2009: The Indian rupee rose on Thursday as sentiment was boosted by stronger regional peers and the sharemarket’s rise to a new high for 2009, though some month-end dollar demand from refiners capped the gains. At 10:45 a.m. (0515 GMT), the partially convertible rupee was at 46.64/65 per dollar, stronger than 46.73/74 at close on Wednesday.

“The market is very quiet, a bit directionless at the moment, all are staying aside as there is no clear view. Just the genuine demand-supply is getting matched,” a senior dealer with a large state-run bank said. Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market.

Demand for dollars tends to peak at the end of each month, when importers are required to make payments for their imports. The U.S. dollar held near 16-week highs on a broadly soft Japanese yen on Thursday, but still looked to end a volatile year with a modest loss against a basket of major currencies.

The index of the dollar against six major currencies was down 0.2 percent, and Asian units were stronger against to the dollar. Indian shares were up 0.9 percent, rising to their highest level since May 2008, supported by gains in U.S. and Asian markets.

But with major centres in Asia shut or winding down for the new year, no major fund flows were expected. Foreign fund inflows of about $17 billion in the stock market this year has been a key factor helping the rupee bounce back from a record low of 52.2 hit in early March.

Last year, outflows of more than $13 billion, had pushed the rupee down by a fifth. One-month offshore non-deliverable forward contracts were quoted at 46.61/71, not far from the onshore spot rate.

In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were both quoting at 46.74 respectively, with the total traded volume on the two exchanges at about $460 million.