Increased capital inflows by foreign funds in the domestic bourses helped the Indian rupee appreciate 24 paise against the dollar on Thursday, thereby marking a two-and-a-half month high.

The Interbank Foreign Exchange (Forex) market saw the domestic currency being quoted 49.38, as against its earlier close of 49.61/62. As per the Forex dealers, fresh capital inflows in Indian share markets and the weakened dollar propped up the rise in the rupee.

As per the statement of a senior dealer with a private bank, though rise in shares and Asian units has helping the strengthening of the rupee, it is the dollar demand coming in from importers has helped it come off its early highs, of as much as 49.2750 per dollar.

In contrast to the scenario in the first two months of this year, when markets substantial foreign outflows, the month of April and the first two days of the ongoing week saw foreigners buying local shares worth $1.5 billion and $500 million respectively.  

Forecasting the future appreciation of the Indian rupee, two economists of the Kotak Mahindra Bank - Indranil Pan and Kaushik Das – remarked: “For the rest of the year we could see rupee appreciating to around 46-47 if the “green shoots” of global recovery are sustained and if this in turn leads to higher capital inflows into India.”