The rupee ended at 45.1700/1800 per dollar, off an

intra-day peak of 44.87 hit in stray deals in the morning and marginally up from Friday's close of 45.2000/2200. It last ended firmer than this on June 11, when it closed at 45.1550/1650.

"The constant dollar buying by nationalised banks drove down the rupee and squeezed traders who had gone short," said a dealer at a foreign bank. "Their dollar-buying spree is probably aimed at adding rupee liquidity and lowering

inter-bank call rates."

The Reserve Bank of India often intervenes in the foreign exchange market through nationalised banks to curb sharp swings by the local currency. Monday's intervention by the central bank

would lead to a slight easing in rupee liquidity in the next few days.

A cash crunch in the money market has seen call money trade at around 6 per cent levels, the highest since June. It usually straddles the reverse repo rate of 4.75 per cent when liquidity in the banking system is adequate.

Earlier, the rupee strengthened to 44.87, helped by a weak dollar, which hit record lows against the euro, increased speculation about a revaluation of the Chinese yuan and a drop

in prices of crude oil, India's biggest import.

The dollar hit a record low against the euro and a

multi-month trough against the yen on worries about bloated deficits in the United States.

Oil prices further moved away from recent record highs as easing concerns about winter supplies prompted big-money hedge funds to switch money away from oil and into other financial

markets.

The rupee is now up nearly one per cent so far this calendar year, rebounding from a 6.3 per cent slump between April and July.

But foreign funds investment has since revived as investors bet on robust economic growth. Foreign funds have bought $5.8 billion worth of Indian shares so far this year, after a record $6.7 billion in the whole of 2003.