Rupee closes at eleven month high against USD at 44.23/24

Mumbai, Dec 29: The Rupee closed at a eleven month high of 44.23/24 against the US dollar with a modest gain of two paise compared to the previous close of 44.25/26, on the last trading session of 2006 today as banks sold dollars to meet fundng needs in a cash squeezed market, dealers said.

They said exporter selling had also pushed the Rupee higher but worries the central bank may step in to prevent further appreciation was checking its gains.

During the morning session, the partially convertible Rupee was at 44.1800/44.1900 per dollar, up from Thursday's close of 44.25/44.26. It went up to 44.17 in early deals.

''Holding long dollar positions is a very expensive proposition at the moment with overnight cash rates hovering around the 16 per cent mark,'' said a foreign bank.

''The Rupee's gains seem to be a bit exaggerated but that is expected in a thin trading session,'' he said.

Forward premia appeared to be choppy throughout the day.

Six-month and Twelve-month premia ended at 3.60 per cent (3.76 per cent) and 2.95 per cent (3.03) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.23 per US dollar, up by 13 paise from yesterday's rate of Rs 44.36 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 58.26/29 (58.19/21) per unit, it was Rs 86.80/82 (86.76/78) per unit against Pound Sterling, and was at Rs 37.23/25 (37.50/52) per 100 units against the Japanese Yen.

The trading in the forex market will remain closed on January one for Bakri-Id, traders said.

UNI