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Rupee ends slightly up at 46.37/$

The rupee ended firm on Monday with dollar inflows from offshore funds staying strong, but dealers said a state-run bank's dollar purchases checked gains and brought it off highs.

The rupee ended at 46.365/375, off the highs around 46.355 and compared with its close on Friday at 46.375/38.

Dealers said large foreign banks which offer custodial services to foreign portfolio funds were sellers of dollars, reflecting strong investments in Indian shares.

So far this month they have invested a net $554.9 million, after net sales in December.

The forward dollar market was mixed, with premiums swinging in line with money market sentiment.

Dealers said short-term liquidity was tight, with call money rates staying close to 10 per cent, but there were hopes the Reserve Bank of India will ease liquidity soon through a cut in banks' cash reserve ratio requirements or increased refinance.

On Friday, RBI executive director P R Gopala Rao said the central bank was reviewing the restoration of export refinance limits.

The central bank had cut export refinance to commercial banks by 50 per cent in July as part of a package to ward off pressure on the rupee.

The six-month premium ended on Monday at an annualised 4.52 per cent compared with Friday's 4.58 per cent.

Intra-day report

The rupee opened steady on Monday and dealers said it could inch up slightly against the dollar amid weekend supplies and sales from banks acting on behalf of foreign funds, dealers said.

At 11:15 a.m., the rupee was quoted at 46.37/38 per dollar after opening unchanged from the previous close of 46.375/38.

Dealers said foreign funds reportedly bought Indian stocks for large amounts on Friday, and these purchases are likely to be reflected in dollar sales by banks during the day.

"If there are sales by the custodian banks I see the rupee touching 46.35. But at these levels there should be good buying from importers," a dealer in a foreign bank said.

Data from the stock market regulator showed foreign funds have invested a net $554.9 million in Indian stocks and bonds till January 18 after being net sellers in December.

Dealers expect state-run banks, who often act on behalf of the central bank, to check sharp gains by mopping excess dollar supplies from the market.

Traders said they were eyeing global oil prices which have inched up in recent sessions after the Organisation of Petroleum Exporting Countries last Wednesday decided to curb production by 1.5 million barrels per day effective February 1.

Oil forms a sizeable part of India's import bill and high crude prices was one of the reasons for the rupee's 7 per cent fall in 2000.

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