MUMBAI: The rupee extended gains for a second day on Wednesday, as higher shares bolstered hopes for foreign capital inflows. Gains in regional peers also supported sentiment.
At 10:40 a.m. (0510 GMT), the partially convertible rupee was at 48.83/84 per dollar, 0.2 percent stronger than Tuesday's close of 48.96/97. On Monday, the rupee had dropped to as low as 49.47, its weakest since May 15.
"The rupee has gained just tracking the positive sentiment in equities. If the Sensex zooms then we could test 48.55/60 which is a good support, else it's likely to trade in a 48.65-48.85 band today," said Agam Gupta, head of forex trading at Standard Chartered Bank.
The main stock index opened up 0.8 percent, joining a rally across Asia after upbeat results from U.S. companies Goldman Sachs and Intel lifted hopes for a recovery in the global economy.
Foreigners have purchased a net $5.8 billion worth of local stocks in 2009, after having sold more than $13 billion last year. The inflow has been key to the rupee's recovery from a record low of 52.2 hit in early March.
Most Asian currencies were trading higher against the dollar. The index of the dollar, versus six major currencies, was down 0.3 percent.
One-month offshore non-deliverable forward contracts were quoting at 48.85/95, weaker than the onshore spot rate.
