Rupee declines as oil firms chase dollars

Rupee declines as oil firms chase dollars
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First Published: Wed, Jun 20 2007. 12 07 AM IST
Updated: Wed, Jun 20 2007. 12 07 AM IST
Despite resuming on a strong note on the back of good FII investment in the public offering of the largest private sector bank ICICI Bank Ltd, the rupee declined by four paise to close at 40.80/81 against the dollar, snapping a three-session winning streak.
In quiet trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened strong at 40.70/72 a dollar from Monday’s close of 40.77/78 per dollar.
It later touched a high of 40.69 a dollar following firm equity market and oversubscription of ICICI’s follow-on public offer within an hour of opening on Tuesday.
Strong equity market, where the benchmark Sensex closed up by 215 points, aided the rupee sentiment in early trade.
However, dollar buying by oil refinery companies to meet their import requirements in lieu of spiralling global crude oil prices forced the rupee to close lower at 40.80/81 a dollar. Light, sweet crude for July delivery remained near $69 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-morning in Singapore.
Initially, fresh dollar demand from importers boosted the rupee sentiments, forex dealers said adding “the currency also drew support from expectations of heavy capital inflow, mainly through the equity market route.”
There was not much intervention by the Reserve Bank of India to cap the rupee’s surge.
RBI fixed the reference rate for the US currency at Rs40.70 per dollar and for the single European unit at Rs54.65 per euro.
The rupee premiums on forward dollar ended further lower due to sustained receiving by exporters.
Benchmark six-month forward dollar premiums payable in November ended at 49-51 paise, down from 53-55 paise on Monday and the far-forwards maturing in May closed lower at 104-106 paise from 107-109 paise previously.
In cross-currency trades, the rupee moved down further against the British sterling, while closed fractionally up against the euro.
The Indian unit dropped further against the sterling to Rs81.03/05 from overnight close of Rs80.81/83 per pound while it ended slightly higher against the single European currency at Rs54.66/68 per euro from Rs54.68/70 per euro previously.
The rupee, however, held steady against the Japanese yen to close at Rs33.03/05 per 100 yen.
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First Published: Wed, Jun 20 2007. 12 07 AM IST
More Topics: Money Matters | Currency |