Rupee at 4-mth high of 54.01 vs US dollar

Tracking stock market movements, the rupee on Monday surged to 53.66 a dollar on robust capital inflows but pared some gains to close at 54.01 - still 29 paise higher - amid Reserve Bank infusing Rs 17,000 crore into system by way of a cut in Cash Reserve Ratio.

At the Interbank Foreign Exchange (Forex) market, the rupee resumed sharply higher at 53.80 a dollar compared to last Friday's close of 54.30.

Soon after, it zoomed to a high of 53.66 on initial rally in stocks as FIIs pumped in Rs 2,252 crore ($410 million).

The Reserve Bank of India (RBI) on Monday cut CRR by 0.25 per cent to 4.50 per cent to release Rs 17,000 crore into the system but kept the lending rates unchanged in view of inflation and twin deficit risks, despite hopes of a rate cut.

But with the Indian stock market benchmark Sensex, which was up by over 250 points initially, trimming gains after RBI decisions, the rupee too weakened by 15 paise in knee-jerk reaction.

Sentiments continued to remain weak before dollar selling by exporters and some banks helped the rupee settle at a 4-month closing high of 54.01, a rise of 29 paise over Friday's close.

Bankers said the CRR cut releases more liquidity into the market, putting pressure on the rupee.