Rupee closes at two weeks high against USD at 44.56/57

Mumbai, Dec 22: The Rupee today closed at a two weeks high at 44.56/57 against the US dollar with a modest gain of six paise compared to the previous close of 44.62/63, on sustained heavy selling by foreign banks and local investors, dealers said.

The Indian Rupee rose against the US dollar on Friday as tight cash supply in the banking system made the market favour the higher yielding local currency.

Inflows from foreign funds as well as Oracle Corporation helped the Rupee. Oracle brought in cash to fund an open offer for Indian banking software provider, i-flex solutions.

The Rupee closed at 44.56/57 per dollar, against the previous close of 44.61/62. It rose 0.2 per cent since last Friday.

Liquidity is tight and there is a growing feeling that the Reserve Bank may not intervene aggressively, and that is pushing up the Rupee.

The market witnessed some dollar demand from oil companies which was, however, offset by foreign inflows.

Market did not see an immediate reprieve as the first trench of the central bank's two stage increase in the cash reserve ratio (CRR) takes effect on Saturday. The second stage will be effective from January 6, 2006.

Forward premia appeared quite choppy during the day. The Six-month and Twelve-month premia ended at 3.85 per cent(3.26 per cent) and 3.03 per cent(2.77 per cent) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.59 per US dollar, up by 14 paise from yesterday's rate of Rs 44.73 per US dollar, a RBI spokesperson said here.

However, the performance of the domestic unit against other currencies was mixed. The Rupee was down against the Euro at Rs 58.82/84 (58.77/78) per unit, it was Rs 87.60/61 (87.59/60) per unit against Pound Sterling, and was at Rs 37.62/63 (37.74/76) per 100 units against the Japanese Yen, dealers said.

Trading will be closed on Monday for Christmas.

UNI