India RBI's Mohan says exchange rate market determined

MUMBAI May 16 (Reuters) - India's central bank deputy governor, Rakesh Mohan, said on Wednesday the rupee exchange rate was market determined but admitted the Reserve Bank of India does intervene in the currency market.

The Indian rupee headed towards last week's nine-year high in early trade on Wednesday as investors sold dollars to generate funds to tide over a cash squeeze in the money market. Traders said capital inflows also helped the gains.

At 10 a.m. (0430 GMT) the partially convertible rupee INR=IN was at 40.77/78 per dollar, moving up from Tuesday's close of 40.9550/9700. The rupee hit 40.53 early last week, its strongest since May 1998, according to Reuters data.