Rupee hits new 5-1/2 mnth high; resistance seen

The Indian rupee faced resistance after rising to fresh 5-1/2 months highs on Thursday as importer demand, global dollar gains and choppy domestic shares weighed.

"Forex market has been exciting today," said Ananth Narayan G., head of fixed income, currencies and commodities at Standard Chartered Bank in Mumbai. The partially convertible rupee was trading at 44.18/19 per dollar, after hitting 44.0950, its strongest since Oct. 15, and marginally below its previous close of 44.16/17. "We saw 43.95 levels only during the Coal India IPO, so think the 43.95-44.11 range will support the dollar for now, think we will eventually bounce back to 45.50-46.00 levels," he added.

Narayan said the market will be nervous in the short term. "Think people aren't positioned for INR strength, especially the exporters. Plus, Asia has seen largish inflows, Asian currencies like the Korean won and Chinese yuan are doing very well. So we will test this support for now, especially with FII/FDI flows coming in. But still think this support should hold for now," he added.