Mumbai: The Indian rupee edged lower on Friday on scattered demand for dollars from oil refiners, while choppy shares provided no clear direction.
India imports nearly two thirds of its oil needs and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they make payments.
At 10:50am, the partially convertible rupee was at Rs44.54/55 per dollar, slightly weaker compared with Rs44.52/53 at close on Thursday.
“There are some oil buyers in the market. I expect the rupee to trade in a range of 44.47-44.62 today,” said Hari Chandramgathan, a foreign exchange dealer with Federal Bank.
Foreign equity inflows have been a key driver for the rupee but shares flip-flopped in early trade, clouding the trend.
So far this year, foreign funds have purchased shares worth a record $24.7 billion, helping the rupee gain 4.4%. In 2009, inflows of $17.5 billion had pushed the rupee up 4.7%.
“There is a dollar buying undertone in the market with eyes on crosses. I expect the rupee to hold in a 44.48-44.62 range today with any correction in the euro weakening the rupee as well,” said Abhijit Ray, a forex dealer with Allahabad Bank.
The dollar index against six majors was up 0.2% but most Asian units rose against the dollar.
The dollar fell within sight of its 1995 record low against the yen, but was firmer against the euro and higher-yielders, with trade made choppy by month-end business but still in ranges ahead of a Federal Reserve decision on easing.
One-month offshore non-deliverable forward contracts were quoted at 44.81, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were all at 44.8275, with the total traded volume on the three exchanges at about $1.3 billion.