Rupee closes high against dollar at 44.19/20

Mumbai, Jan 22: The Rupee closed higher today at 44.19/20 against the US dollar as compared to the previous day's close of 44.26/27, dealers said.

The Indian rupee rose against the dollar today on equity-related inflows, but investors remained cautious of provoking the central bank after its suspected intervention to cap the currency last week.

The partially convertible rupee ended at 44.19/20 per dollar, firmer than Friday's close of 44.26/27.

Foreign funds invested a net USD 17.2 million in local stocks on Friday, and it is expected that further inflows may lend some support to the rupee.

The rupee is overvalued by about 8.5 per cent on a trade weighted basis, a level that the Reserve Bank of India may be unhappy about.

Data last week shows that the central bank bought about USD 5 billion dollars in November and December to check the Rupee's rise.

The central bank is also suspected to have intervened, through state-run banks, last week to weaken the Rupee.

Analysts say that the central bank intervenes to protect exporters' competitiveness and to curb excessive volatility.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.21 per US dollar, up by 13 paise from its Janurary 19 rate of Rs 44.34 per US dollar, an 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 57.20/22 (57.34/36) per unit, it was Rs 87.24/26 (87.26/28) per unit against Pound Sterling, and at Rs 36.28/30 (36.46/48) per 100 units against the Japanese Yen, dealers said.

UNI