The Indian rupee ended weaker on Friday after falling sharply from a near-eight-month high as state-run banks bought dollars on a sustained basis in suspected intervention on behalf of the central bank, dealers said.
The partially convertible rupee ended at 44.71/7150, having fallen from an intra-day high of 44.35 per dollar, which was its strongest since late March. It had closed local trade on Thursday at 44.56/57 per dollar.
"The intervention was massive, and there was dollar demand from oil companies as well," a chief dealer with a private sector bank said. "I would presume the Reserve Bank had a particular level in mind today," he said.
A central bank spokeswoman said the Reserve Bank of India did not comment on the day-to-day movement of rupee. Dealers said the intervention started at around 44.40 per dollar. As the dollar gained, it forced those who had been buying rupees to unwind their positions.
The central bank was suspected of intervening through state-run banks on Tuesday as well. Worries that a rally in the rupee may be eroding export competitiveness could have forced the central bank's hand, dealers said. Standard Chartered Economist Shuchita Mehta forecast the rupee would end 2006 at 44.50 per dollar.
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