Rupee flat at 44.1850/1950 against the US dollar

Mumbai, Feb 21 (UNI) The Rupee today remained steady at 44.1850/1950 against the US dollar, from its previous close of 44.18/19 at the interbank foreign exchange (Forex) market here, amid speculation of a further hike in the cash reserve ratio (CRR) and the Bank of Japan's (BoJ's) decision to raise its benchmark interest rate to 0.5 per cent.

The Bank of Japan's decision, which came at the end of a two-day monetary policy board meeting, highlights confidence that price stability and consumer spending would withstand slightly tighter credit.

''The vote among the nine-member board was 8-1 in favour of the hike,'' the bank said in a statement.

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

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

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

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

The RBI's suspected intervention has increased money supply, which grew 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 two years, experts added.

Forward premia ended 6-7 paise lower on account of buy-sell swap contracts. Six-month and Twelve-month forward premia closed at 3.80/82 per cent (3.74/75) and 3.15/16 per cent (3.12/13), respectively.

Earlier in the day, the Reserve Bank of India (RBI) fixed the reference rate at Rs 44.19 per US dollar, up by one paisa from its yesterday's rate of Rs 44.20 per US dollar In cross currency trade, the Rupee ended on a firm trend against all the three major currencies. Euro closed at Rs 57.98/58 (58.04/06) per unit. It closed for Pound at Rs 86.22/27 (86.15/18) per unit and Rs 36.52/55 (36.75/77) per 100 units for the Yen, traders added.

UNI