Rupee closes low against US Dollar at 44.35/36

Mumbai, Jan 3 (UNI) The Rupee closed low at 44.35/36 against the US dollar compared to 44.23/24, the previous day's close here today, dealers said.

The Indian Rupee slipped on Wednesday on importer-led dollar buying but a likely cash squeeze in the banking system due to the second-round effects of a cash reserve ratio (CRR) increase may prevent a sharper fall.

Dealers said an upcoming 90-billion Rupee federal bond auction coupled with final phase of a staged increase in the CRR -- which comes into effect later this week -- will force banks to sell the dollar for Rupees.

The partially convertible Rupee ended down for the second straight session at 44.35/36 per dollar, 0.27 lower than a previous close of 44.23/44.24.

''There has been some good importer demand today. But the Rupee may trade in a broad 44.20/44.50 in the absence of fresh triggers,'' said a leading dealer.

Forward premia fell as massive gains in the past few sessions gave way to profit taking. Six-month and Twelve-month premia ended at 3.60 per cent (3.15 per cent) and 2.91 (2.69 per cent) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.20 per US dollar, up by three paise from Rs 44.23 per US dollar, the rate on December 29, 2006, 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 58.62/64 (58.73/75) per unit, it was Rs 86.87/89 (86.17/19) per unit against Pound Sterling, and was at Rs 37.10/12 (37.20/22) per 100 units against the Japanese Yen, brokers said.

UNI