Mumbai: Rupee eased on 13 June, weighed down by near record global oil prices and weaker offshore rates, but investors were wary of adding aggressive short positions on fears of central bank intervention.
At 9:51 am, the partially convertible rupee was trading at 42.87/88 per dollar, weaker than 12 June’s close of 42.835/845. It had hit a 13-month low of 43.21 on May 22.
“Offshore prices on the dollar/rupee are higher and we may see some central bank activity around the 42.95 mark but the stock market action will be the key,” said L. Subramanian, chief currency dealer at ICICI Bank.
Oil was trading below $137 a barrel, near record highs of $139.12 hit last Friday, which could widen India’s trade deficit as it imports about 70% of its oil.
The stock market opened 0.5% up, but is down about a quarter this year. Foreigners sold $1.38 billion worth of stocks this month, bringing their net sales for this year to around $5.3 billion. They bought a record $17.4 billion in 2007.
One-month offshore non-deliverable forwards contracts was at 43.10/43.10, weaker than the onshore rate.
Investors were waiting for weekly inflation data, which may provide clues on the central bank’a policy moves in the near term after it raised a key lending rate by 25 basis points to 8% on Wednesday.
Higher interest rates increase the attractiveness of rupee-denominated assets such as bonds.
Weekly inflation data is expected at 3-year highs of 8.28%.