Mumbai:The rupee fell for a second day on speculation refiners will buy more dollars to pay for imports after crude oil prices rose for a fourth day.
Companies such as Indian Oil Corp., the nation’s largest refiner, may have stepped up dollar purchases before the price of crude rose further, said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank. That pushed the rupee to the lowest in almost three months. India meets three-fourths of its energy needs from overseas.
“Refiners’ demand has emerged at a time when dollar supply is very thin,” Mumbai-based Bhatt said. “Since there hasn’t been much scope for dollar supply to increase, the rupee will be under pressure in coming days.”
The rupee fell 0.2% to 39.78 per dollar at close on Monday in Mumbai from Rs39.68 on 15 February, according to data compiled by Bloomberg. That’s the lowest since 28 November.
Crude oil for March delivery rose as much as 81 cents, or 0.9%, to $96.31 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $96.13 a barrel.
The rupee advanced earlier on speculation exporters will convert their foreign exchange earnings into the local currency. Companies such as Tata Consultancy Services Ltd and Infosys Technologies Ltd, India’s top software exporters, may boost profits by converting overseas earnings into rupees after the local currency fell in the past two weeks.
“The sentiment is in favour of the rupee and that probably prompted some companies to sell dollars they were holding,” said Rohan Lasrado, a currency trader at HDFC Bank Ltd in Mumbai. “I expect the bias will remain for rupee to rise.”