Rupee closes lower against US Dollar at 44.30/32

Mumbai, Jan 5 (UNI) The Rupee closed softer today at 44.30/32 against the per US dollar compared to 44.28/30, the previous day's close, dealers said.

The Indian Rupee trimmed early losses as investors geared up for a cash crunch next week that will make holding dollars expensive.

However, fears that the central bank may buy dollars to stem the Rupee's recent rally to protect exports, which will also boost surplus cash in the system, prevented investors from pushing the local unit sharply higher.

The partially convertible Rupee ended at 44.30/44.32, after falling to an intra-day low of 44.35 but little changed from its previous close of 44.28/30.

There was some dollar buying around the 44.25 levels, but the near-term outlook continues bullish on the Rupee, which may test 44.05 levels next week, as Rupee liquidity gets squeezed.

Markets believe that with annual money supply growth running around 19 per cent and bank credit growth fluctuating around 30 per cent, the central bank may be reluctant to add more funds to the banking system by selling Rupees to cap its strength.

Forward premia fell as massive gains in the past few sessions gave way to profit taking. Six-month and Twelve-month premia ended at 3.53 per cent (3.66 per cent) and 3.01 (3.01 per cent) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.30 per US dollar, up by 12 paise from its yesterday's rate of Rs 44.42 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 58.03/05 (58.00/02) per unit, it was Rs 85.96/98 (86.07/09) per unit against Pound Sterling, and at Rs 37.48/50 (37.11/13) per 100 units against the Japanese Yen, dealers said.

UNI