Mumbai, Jan 22: The Rupee today closed higher by seven paise at 39.48/50 against the US dollar on short-covering of dollars by foreign banks in view of another steep fall in the stock markets.
Dealers said "Rupee slipped sharply to two-month low early today as traders cut positions on fears that foreigners will remain large sellers of local shares amid fall in Asian equity markets''. Rupee opened low at 39.68/70 per dollar, weaker than the previous finish of 39.555/565. Its low of 39.74 per dollar was its weakest since late November.
Later, the Rupee bounced back from the 2-month low with the sentiment boosted by a recovery in local stocks and on aggressive unwinding of dollar holdings by exporters and corporates.
Rupee at 39.56/57 per dollar, was slightly softer than the previous finish of 39.555/56, but climbed smartly from an intraday low of 39.78, its weakest since late November.
Indian shares were trading about 5.5 per cent down in late afternoon trade, paring opening losses of almost 13 per cent, as share markets around the world sank on fears of a U.S.-led recession intensified.
Meanwhile, The Reserve Bank of India today fixed the reference rate at Rs 39.73 per dollar. The reference rate declined by 35 paise as compared to yesterday's rate of Rs 39.38 per dollar, a RBI spokesman said.
The six-month forward premium closed lower at 1.75 (1.77) per cent, while annualised premium ended at 1.42 (1.52) per cent.
The Indian unit ended weaker at 57.22/23 (57.25/26) against the Euro. However, it closed firm at 77.09/10 (77.07/08) per unit against the Pound Sterling. Against the Japanese Yen, the Rupee ended low at 37.08/09 (37.36/37) per hundred units.