Rupee rise to 18-mth high at 43.70/72 against USD

Mumbai, Mar 21: The rupee today surged to an 18-month high at 43.70/72 against US dollar from its last close of 43.73/75 as banks sold dollars to tide over a cash shortage in the money market.

Later, the rupee fluctuated in a wide range between 43.60 and 43.75 per dollar during the morning session.

The domestic unit rose to the 18-month high as investors sold dollars to raise funds to tide over a cash shortage that pushed call money rates to their highest level in more than 10 years.

The investors were watching for any sign of intervention by the Reserve Bank of India (RBI) to check the rupee's rise.

The rupee was at present at 43.71/72 per dollar, having hit a high of 43.65 in early trades, its strongest since August 2005. It had risen 0.6 per cent to close at 43.73/75 yesterday.

The overnight cash rate, the rate at which banks lend funds to each other, jumped to 70 per cent today, the highest since 1996, when the rate topped 100 per cent.

The market analysts believed that the rupee's sharp gains may be temporary and could weaken as cash rates ease.

The central bank purchased close to USD 8 billion in the three months to January, and investors widely believe it has played an active role in capping the rupee in February, traders added.

UNI