Rupee closes slightly low at 42.86/88 against USD

Mumbai, Apr 11: The Rupee today ended weaker at 42.86/88 against the US dollar, compared to yesterday's close of 42.82/84, on sustained selling pressure of dollar by traders and oil companies, dealers said.

The Indian currency opened lower at 42.84/88 and touched a day's high of 42.80/82. It later attained a low of 42.92/94 before closing at a weak level of 42.86/88 with the modest loss of four paise from the last close.

A leading dealer pointed out ''Rupee backed off from its recent 8-year high after oil companies and traders resorted to dollar buying to take advantage of the attractive levels. Later, even the state-run banks also started absorbing dollars to control the massive gains enjoyed in the local currency in the past few sessions. With PSU banks finally entering the market, rupee might suffer further and touch the levels of 43 per US dollar.'' Forward premia experienced massive volatility as the levels opened on a lower note, rose later before falling back again in later stages of the trade. March premia fell by 2-3 paise. Six-month and Twelve-month forward premia closed at 4.93 per cent (5.00) and 3.99 per cent (4.04) respectively.

The Rupee has gained about 10 per cent since hitting a three-year low last July, and the central bank is thought to be uncomfortable with its pace of appreciation.

Analysts say the central bank intervenes to preserve exporters' competitiveness.

The Reserve Bank of India (RBI) today fixed the reference rate at Rs 42.87 per US dollar, down by one paisa from its yesterday's rate of Rs 42.86 per USD, according to a RBI spokesperson here.

Besides, the domestic unit witnessed a firm trend against major world currencies. Against the Euro it closed stronger at 57.40/42(57.36/37), while Pound finished higher at 84.54/56 (84.32/34) per unit each and Yen was also quoted higher at 35.84/86 (35.86/88) per 100 units, brokers added.

UNI