Rupee closes down at 44.27/28 against USD

Mumbai, Feb 28 (UNI) The Rupee today closed steady at 44.27/28 against the US dollar compared to 44.21/22, the previous day's close, on sustained selling pressure of dollar by foreign banks, after another stock market fall hit sentiment, dealers said.

But the central bank was seen supporting the local currency in a bid to smooth volatility, traders said.

The partially convertible Rupee ended lower at 44.27/28 per dollar, off an early low of 44.37, its weakest level since January 15. It ended at 44.21/22 yesterday.

Indian shares provisionally ended 4.2 per cent lower today after a global sell-off and a federal budget that raised levies on cement and brought software services under a minimum tax net.

The RBI is thought to intervene in currency markets through state-run banks to smooth excess volatility and protect exporters' competitiveness, but some analysts said it might also be to rein in money supply, currently running at 21.3 per cent.

Earlier in the day, investors dumped Asian shares and emerging market bonds as a global stocks rout that started in China gathered momentum after Wall Street shed more than 3 per cent.

The Union Budget 2007-08 did not have much impact on the Rupee, though some analysts forecast it will help the local currency strengthen in the medium run.

Forward premia closed higher, as importers covered short positions at lower levels. Six-month and Twelve-month forward premia ended at 3.44/45 per cent (3.38/40) and 3.15/3.16 per cent (3.10/11), respectively.

The Reserve Bank of India (RBI) fixed the reference rate at Rs 44.31 per US dollar, down by 11 paise from its previous rate of Rs 44.20 per USD, according to a RBI spokesperson.

Major currencies against Rupee displayed a mixed trend such as Euro closed high at 58.34/35 (58.37/38), while Pound finished at 86.58/60 (86.82/84) per unit each and Yen was quoted at 37.33/35 (37.01/02) per 100 units, brokers said.

UNI