The Hindu Business Line : Rupee closes higher

The rupee closed higher by about 9 paise against the dollar on Friday on dollar selling, even as the data on inflation released on Friday showed prices touching a three-year high. The rupee opened at 40 and then fell to low of 40.05 as foreign banks bought dollars. After the inflation figures were released, there was a spate of dollar selling, which took the rupee up to the day's high of 39.93. The rupee closed at 39.9550 against the previous close of 40.04.

According to a chief forex dealer with a private bank said the rupee traded between 40 and 39.98 for a larger part of the day.

In the forward premia market the 6-month premia closed at 2.48 per cent (2.21 per cent) and the 12-month closed at 1.75 per cent (1.71 per cent). Next week the rupee is likely to strengthen, though not sharply, the dealer said. Some economists are of the opinion that the government and the Reserve Bank of India should let the rupee appreciate, as it would help check inflation.

A stronger rupee would make imports cheaper measured in rupee terms which would greatly benefit crude oil imports. But, according to a senior bank official, it is unlikely to help much. "It will help only if imports are contributing to inflation in a major way. It is very important to see what the components of inflation are. Is it only crude oil or does it include other components as well?" he said. - Our Bureau

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