Rupee strengthens to 50/dollar

The rupee rose to its strongest close in more than a month as the share market extended a winning streak into a sixth session on Thursday, raising expectations of sustained capital inflows that would support the currency.

It ended at 50.00/02 per dollar, its strongest close since February 25, having risen to 49.85 during trade, according to Thomson Reuters data. It had ended at 50.19/20 on Wednesday. The market will be closed on Friday for a holiday.

"With stocks remaining in positive territory at the close of trading, it was a sentiment-driven rise for the rupee," a trader with a state-run bank, said. "But, there was dollar buying by a public sector bank, which could be for a defence-related payment. This cut the day's gains for the rupee," he added.

Indian shares rose 0.6% on Thursday to a six-month closing high. The benchmark 30-share BSE (^BSESN : 16632.01 -222.92) index has risen 12.9% in six sessions, and is up over 34% from its 2009 low hit on March 6.

Foreigners have been net buyers of more than $270 million of stocks in early April but are still net sellers of $1.4 billion so far in 2009.Foreign fund flows have been a key factor for the rupee's fortunes. Last year foreigners were net sellers of more than $13 billion of stocks, and the rupee fell 19%.