Rupee closes higher at 44.12/13 against US dollar on CRR hike

Mumbai, Feb 14 (UNI) The Indian Rupee closed higher at 44.12/13 against the U S dollar from the previous close of 44.20/21 at the interbank foreign exchange (Forex) market today following reports of RBI's hike of 0.5 basis points on Cash Reserve Ratio (CRR) and sustained selling pressure on the dollar by foreign banks, dealers said.

After market hours on Tuesday, the Reserve Bank of India (RBI) announced a two-stage, 50 basis point increase in the cash reserve ratio (CRR), the percentage of bank's total deposits they have to keep with it. The move should drain Rs 14,000 crore from the system.

The Indian Rupee gained against the dollar on Wednesday after monetary policy was tightened again to rein in credit growth, and on robust capital inflows, but the rise was limited by central bank intervention.

The partially convertible rupee ended at 44.12/13 per dollar, up from Tuesday's 44.20/21, which was the lowest close since January 25. It had hit a 16-month high of 44.03 on Friday.

The Rupee is overvalued by 9.2 per cent, up from 8.25 per month a month ago. It has gained about 6.5 per cent since hitting a three-year low in July and some analysts say the central bank is concerned about the pace of appreciation.

The Rupee has also been bolstered by robust economic growth estimates, a record breaking stock market and a recent S&P upgrade, with foreign direct investments into India expected to be about USD 12 billion over the fiscal year to March.

Forward premia fell during the session on account of buy-sell swap contracts. Six-month and twelve-month forward premia closed at 3.02 per cent (3.58) and 3.25 per cent (2.92) respectively.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 44.16 per US dollar, up by one paisa from its yesterday's rate of Rs 44.17 per US dollar, according to an RBI spokesperson.

In the cross currency trade, the Rupee ended on a mixed trend against all the three major currencies and for Euro closed at Rs 57.66/68 (57.48/50) per unit. It closed for Pound at Rs Rs 86.21/22 (85.96/97) per unit and Rs 36.42/44 (36.40/42) per 100 units for Yen, traders added.

UNI