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Our Bureau

Mumbai, March 26

The rupee closed at a 20-month high of 43.30 against the dollar on Monday due to a liquidity crunch in the banking system. The home currency opened at 43.50/52 but finally rose by 26 paise to close at 43.30 against the previous close of 43.56/57 on Friday.

According to dealers, the tight liquidity prompted banks to sell dollars to meet their cash requirements. "There was strong dollar selling by banks," said a dealer with a private bank. "The central bank would not intervene in the forex market to lower the inflation, currently hovering at 6.46 per cent," he added.

The dealers expect the rupee to trade in the range of 43.10-43.15 this week. In the forward premia, 6-month closed at 5.45 per cent (3.97) and the 12-month closed at 4.15 per cent (3.37). "As the financial year comes to an end, banks in need for funds are swapping dollars, pressuring the forward-premia," the dealer said. "The market will normalise in the first week of April," he added.

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