Mumbai: The Indian rupee was little moved in early trade on Monday, 12 May, as banks squared positions ahead of monthly industrial data which may provide clues on growth prospects in Asia’s third-biggest economy.
Traders said large-scale dollar buying from refiners, which had knocked the rupee down sharply last week to 41.80 per dollar, its lowest in more than a year, was noticeably absent, easing pressure on the currency.
At 10am, the partially convertible rupee was at 41.60/61 per dollar, steady with Friday’s close. It lost 2.3% last week and has fallen 5.3% in 2008, making it Asia’s worst-performing currency against the dollar behind the Korean won.
Industrial output in March is forecast to have grown an annual 6.2% , slowing from February’s 8.6%. The data is due at noon.
“Oil companies are not buying and some trade-related inflows are supporting the rupee, and we should broadly trade in a 41.45-41.65 range for the day,” said P.V. Rao, head of currency trading at Mumbai-based IndusInd Bank.
Oil has hit record highs above $126 a barrel. India imports 70% of its oil and refiners are among the biggest buyers of dollars.
Rising oil prices has raised concerns the trade deficit may deteriorate substantially in the near term. It widened 35.5% to $80.4 billion in the fiscal year ended March.
The stock market was down in morning trade, extending last week’s fall of 4.9% and heightening concerns that foreigners will withdraw funds. In 2008, foreigners have been net sellers of $2.9 billion of stocks.
One-month offshore non-deliverable forwards were quoting at 41.71-41.81 per dollar, weaker than the onshore rate, and the six-month forward dollar premium was quoting at 0.25-0.2675, slightly above 0.23-0.25 on Friday.