Mumbai: The Indian rupee gained on Tuesday as softening global oil prices calmed worries of a widening trade deficit but a subdued outlook for stocks kept traders uneasy about foreign flows.
At 9:11am, the partially convertible rupee was at 42.90/91 per dollar, a shade stronger than 42.945/955 on Monday. It hit a 13-month low of 43.21 in late May.
Asian stocks edged lower on Tuesday after oil prices surged to a fresh record overnight, fuelling fears that higher inflation will sap consumer demand and business investment around the world.
At the Interbank Foreign Exchange (forex) market, the Indian unit moved in a range of 42.88 and 42.98 during the day after resuming stronger at 42.90/92 a dollar against its last weekend’s close of 42.94/95 a dollar.
The rupee had firmed up to 42.88/89 a dollar in late morning trade following buoyant equity markets. Dealers said the local currency lost initial gains as oil companies bought dollars in the latter part of the day as oil prices eased to $134 a barrel in Asian trade.
Meanwhile, the benchmark Sensex bounced by 206 points, or 1.36%, today. Asian indices too were up by 0.18% to 2.72%.
Oil refiners made small purchases of the greenback at the current levels to meet their monthly import payments, said a dealer with leading public sector bank.
India imports about 60 to 70% of its oil requirements and import payments of oil companies increased substantially following a sharp rise in global crude prices in the last couple of months.
Heavy capital outflows in the current calendar year also weighed on the rupee sentiment.