The rupee rose to its highest level in more than a week on Monday as dollar sales by some exporters in early trade helped, but traders will watch stocks and the dollar's moves versus majors for further cues.At 10:15 a.m. (0445 GMT), the partially convertible rupee was at 46.88/89 per dollar after hitting 46.8450, its strongest since July 16, and 0.1 percent above Friday's close of 46.94/95."The currency market sentiment changes very quickly these days. Rupee looks good today, if we see a cash reserve ratio hike tomorrow, equities may correct a bit which will take the dollar higher," said Nitesh Kumar, an interbank dealer with Development Credit Bank."I expect the dollar-rupee to be stopped at 46.80 today and see a 25 basis point hike in each -- repo rate, reverse repo rate and cash reserve ratio -- tomorrow."The Reserve Bank of India is widely expected to raise key interest rates by 25 basis points at its policy review on Tuesday.Rate hikes could temporarily hurt the rupee if stocks fall, but in the long run would help the currency gain on the back of strong capital inflows due to the interest rate differential between the advanced economies and India."There were some flows from exporters which helped the rupee. 46.85 is a strong support for the dollar, if it breaks then we could see it strengthen to 46.75. If not, then it should hold in a range of 46.85 to 47.00 today," a senior dealer with a private bank said.Indian shares were choppy on Monday but the bias was towards further gains on the back of strong Asian markets.Shares are closely monitored for cues on foreign fund flows. So far in 2010, foreigners have bought a net $8.9 billion worth of shares, in addition to last year's record $17.5 billion inflow.Traders were also watching the dollar's moves versus majors for direction. The index of the dollar against six major currencies was little changed.The euro hit a seven-week high against the yen on Monday as a rise in shares prompted dealers to unwind long yen positions, but scepticism about the credibility of the euro zone's bank stress tests limited its gains versus the dollar.One-month offshore non-deliverable forward contracts were quoted at 47.06, weaker than the onshore spot rate.In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at 46.88 and 46.8775 respectively, with the total traded volume on the two exchanges at about $720 million.(Reporting by Swati Bhat; editing by Malini Menon)(For more business news on Reuters India click http://in.reuters.com)News posted by www.newsinfoline.com
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