Friday, March 31 2006 11:54 Hrs (IST) - World Time -

Mumbai: The Rupee rallied smartly against the US currency early today (Mar 31, 2006) on sustained strong FII inflows amid a retreating dollar overseas in cautious trade at the Interbank Foreing Exchange (forex) market ahead of crucial inflation data.

The domestic unit was quoted at Rs 44.6525/6600 per dollar in late morning deals, sharply higher from Wednesday's near-3 months close of Rs 44.70/71 per dollar.

The Rupee opened distinctly firm at 44.61/62 per dollar.

Healthy FII inflows amid a slightly weakening dollar overseas fuelled a smart rupee rally early today despite flaring crude oil prices at US$ 66.89 a barrel, a forex dealer said.

"Residual month-end dollar demand, however, could limit Rupee gains," he added.

Foreign Institutional Investors (FIIs) infused US$ 83.90 million into equity markets on March 28 after pouring in a whopping US$ 124.10 million on March 27. FIIs have invested nearly US$ 1.3 billion in March so far.

Traders expect the Rupee to strengthen further due to strong Economic fundametal but fears of central bank intervention may limit the Rupee gains.

Meanwhile, marketmen were awaiting crucial inflation data to be release later today for further clue of Rupee direction.

In Cross Currency trade, the Euro was quoted at Rs 54.24/26, Pound Sterling at Rs 77.89/91 and Japenese Yen (100) at Rs 38.00/02.