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Rupee At 3-week High...

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At 9:55 a.m., the partially convertible rupee was at 39.850/860 per dollar after hitting 39.83 in early trades, its highest since 31 March.
The rupee ended at 39.92/925 per dollar on Thursday and the currency market was closed on Friday for a holiday.
"It's mainly because of the CRR hike. The timing is something that has caught the market by surprise," says Paresh Nayar, chief dealer at Development Credit Bank.
"People have started selling their long positions," he says, adding the holiday on Friday had tightened cash conditions.
The central bank after market hours on Thursday unexpectedly announced a 50-basis-point increase in banks' cash reserve ratio (CRR) to cool inflation from three-year peaks.
It said the move would drain Rs 185 billion ($4.6 billion) from the banking system, with the increases coming into effect in two stages.
Draining surplus cash from the money market could improve the attractiveness of rupee-denominated assets as cash rates may rise, prompting foreign investors to buy local assets.
Interest-rate differentials between India and the US are at 550 basis points. It also makes holding dollars expensive for banks as funding costs rise.

The Reserve Bank of India (RBI) may take additional measures when it meets on 29 April for its scheduled policy review, analysts said.
A. Prasanna, an analyst at ICICI Securities, says there is a 50 per cent chance the central bank may raise the benchmark lending rate, which is currently at 7.75 per cent.
Oil companies buying dollars to meet month-end import commitments capped the rupee's rise, dealers said.
Kotak Mahindra Bank expects the rupee to trade in a broad 39.75-40.30 per dollar band in the near term.

(Reuters)