Rupee closes at nine month high against USD at 44.30/31

Mumbai, Dec 27 (UNI) The Rupee today closed at a nine month high of 44.30/31 against the US dollar with a smart gain of fourteen paise compared to the previous close of 44.44/45, on sustained heavy selling by foreign banks and local investors, dealers said.

The Indian Rupee rose to its highest in more than nine months on Wednesday as banks and companies sold the dollar for the higher-yielding Rupee as a cash crunch in the domestic banking system weighed.

Later, the partially convertible Rupee was at 44.38/44.39 per dollar after touching 44.3150, a level it last tested on March 6. It was 0.14 per cent higher than a previous close of 44.44/44.45 per dollar on Tuesday.

Domestic overnight funds rate have shot up to 14 per cent, the highest in six years, after the central bank's first phase of a 50-basis point increase in the cash reserve ratio, which is the amount of funds banks have to deposit with it, kicked in on Saturday.

''Overnight call money is unlikely to come off by a huge margin this week, unless there is huge spending by the central government or an aggressive bout of dollar buying by the central bank,'' said a leading broker.

''Liquidity is really tight and that is holding back traders from taking long dollar positions,'' he added.

Forward premia appeared quite choppy during the day. The Six-month and Twelve-month premia ended at 4.50 per cent(4.70 per cent) and 3.65 per cent(3.72 per cent) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.39 per US dollar, up by 15 paise from yesterday's rate of Rs 44.54 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 58.60/62 (58.39/40) per unit, it was Rs 87.30/32 (87.60/61) per unit against Pound Sterling, and was at Rs 37.60/62 (37.40/42) per 100 units against the Japanese Yen, dealers said.

UNI AR OBB SKB1933