Re may hit decade high of 37 to dollar: Survey

India's rupee may extend gains to 37 versus the dollar, the highest in more than a decade by March, the Associated Chambers of Commerce and Industry of India said, citing its survey of 215 chief executive officers.

Almost 71 per cent of those surveyed predicted the level, which hasn't been reached since November 1997, the New Delhi-based lobby group said in a statement by e-mail.

Fund managers will increase investment in India as the US interest-rate cut last month prompts them to seek higher returns in the world's second-fastest growing major economy, the statement said.

"After the cut in rates, the arbitrage opportunity of shuffling money from the US to Indian markets has increased," the Associated Chambers said.

Should inflows "maintain their pace at the present level, it will not be possible for the central bank to check the appreciation" of the rupee.

The rupee traded at 39.8125 as of 1:40 p.m. in Mumbai, according to data compiled by Bloomberg. It advanced to 39.62, a nine-year high, on September 26 and is up 11.3 per cent this year.

Global funds bought $4.6 billion of Indian shares more than they sold last month, compared with net sales of $1.9 billion in August, data provided by the Securities & Exchange Board of India showed. The benchmark stock index has risen more than 40 per cent in the past 12 months.

The Reserve Bank of India is "left with few options but to cut interest rates" to slow the pace of the currency's rally after inflation eased to the lowest in almost five years, the Associated Chambers said, citing the survey.

Governor Yaga Venugopal Reddy has increased the rate at which the central bank injects funds six times since the beginning of 2006 to a five-year high, and has also raised the amount of cash lenders must set aside four times since December to 7 per cent.