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Our Bureau

Mumbai, Dec. 29

The rupee was volatile against the dollar on Friday but closed the day at around Thursday's levels. The currency opened at 44.25 and touched an intra-day high of 44.18. It then fell to a low of 44.38 but gained to close at 44.27, against Thursday's 44.25/26. Dealers said tight liquidity conditions prompted traders to sell dollars for rupees. However, nationalised banks were seen buying dollars on behalf of oil companies during the day. "Despite an outflow of $230 million from the stock market, there was not much of dollar buying. The impact of the outflow can be seen when the rupee opens on January 2," said a dealer at a private bank. The low volumes in the forex market due to the holiday season also caused volatility in the market, traders said. Market participants expect the rupee to appreciate to 44 as the second hike in the cash reserve ratio will further drain liquidity from the system. In forwards, the six-month closed at 3.60 per cent (3.76) and the 12-month ended at 2.93 per cent (3.03).

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