Rupee looses shine and ends at 44.18/19

Mumbai, Feb 20: The Rupee today closed lower at 44.18/19 down fromits previous close of 44.13/15 against the US dollar, at the interbankforeign exchange (Forex) market here, amid speculations that theCentral Bank has once again driven it down in a bid to keep exportscompetitive.

Market analysts believe the Reserve Bank of India (RBI) has prevented the Rupee from strengthening to a 16-month high.

Traders said capital inflows were subdued after US markets wereclosed on Monday for a public holiday, which also weighed on the Rupee.

Data shows the RBI bought about USD five billion in November andDecember and the market suspects the Central Bank has intervenedregularly this year to check the Rupee's gains, a broker said.

The RBI bought about USD 3.5 billion in the first half ofFebruary. India's foreign exchange reserves rose by about USD fivebillion on February nine from a week earlier, indicating the extent towhich the Central Bank has entered the currency market.

Robust foreign investment into India has helped boost the Rupee byabout 6.5 per cent from a three-year low hit last July and the marketfeels the Central Bank is uneasy with the Rupee's pace of appreciation.

The RBI's suspected intervention has increased money supply, whichgrew by an annualized 21.3 per cent in the two weeks to February two,helping fan inflation which is running at its highest in more than twoyears, experts added.

Forward premia ended 5-6 paise lower on account of buy-sell swapcontracts. Six-month and Twelve-month forward premia closed at 3.74/75per cent (3.36) and 3.12/13 (3.11) per cent, respectively.

Earlier in the day the Reserve Bank of India (RBI) fixed thereference rate at Rs 44.20 per US dollar, down by 13 paise from itsyesterday's rate of Rs 44.07 per US dollar.

In cross currency trade, the Rupee ended on a firm trend againstall the three major currencies and for Euro closed at Rs 58.04/06(57.93/94) per unit. It closed for Pound at Rs 86.15/18 (86.76/78) perunit and Rs 36.75/77 (36.88/90) per 100 units for the Yen, tradersadded.

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