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Rupee weakens on month-end dollar demand

Rupee weakens on month-end dollar demand
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First Published: Wed, Dec 29 2010. 10 22 AM IST
Updated: Wed, Dec 29 2010. 10 22 AM IST
Mumbai: The Indian rupee edged marginally lower on Wednesday, weighed by month-end dollar demand from oil refiners and importers, but gains in domestic shares and a weak dollar overseas helped limit a further decline.
At 10:50 am, the partially convertible rupee was at 45.14/15 per dollar, slightly weaker than its 45.09/10 close on Tuesday.
“The rupee has been trading without any direction for the last few days. But it seems market is positioning for good inflows next year. I am expecting a range of 45.05 to 45.25 for today,” said Hari Chandramgathan, a senior forex dealer at Federal Bank.
Traders said some month-end dollar demand from oil firms and other importers also weighed on the rupee.
India imports nearly two-thirds of its oil needs and refiners are the largest buyers of dollars in the domestic currency market, with their demand tending to peak at the end of each month when they are required to make payments.
But, gains in other regional peers underpinned rupee sentiment and prevented a further decline. Almost all Asian currencies rose versus the dollar.
The dollar found a firmer footing on Wednesday after a sharp reversal against the euro the previous day in whipsaw action exaggerated by thin year-end flows.
But, the index of the dollar against six major currencies was still down 0.1% at 80.289 points.
Indian shares were trading 0.4% higher on Wednesday, with Infosys Technologies and Reliance Industries leading the gains.
Foreign institutional investors (FIIs) have pulled out a net $500 million from Indian equities this month through Monday. They are, however, net investors of $28.5 billion in 2010, on top of the $17.5 billion pumped in last year.
One-month offshore non-deliverable forward contracts were quoted at 45.30, 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 45.14 with the total traded volume on the three exchanges at $1.3 billion.
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First Published: Wed, Dec 29 2010. 10 22 AM IST