Mumbai: The rupee strengthened on Wednesday, comforted by gains in the euro and Asian currencies, but domestic oil firms’ dollar demand put a lid on the rupee’s rise.
At 11:15am, the partially convertible rupee was at Rs 44.7075/7100 per dollar, stronger than Tuesday’s close of Rs 44.74/75.
“There is some strong dollar buying interest from oil firms around 44.65 level,” said a dealer with a foreign bank.
“We could see the rupee in 44.60-44.75 range through the day.”
Oil is India’s largest import item and domestic oil refiners are the largest purchasers of dollars in the local forex market.
“Global risk aversion is also still very much a fact, as concerns on the euro zone linger. So dollar will be bought on dips,” a dealer at another foreign bank said.
The euro maintained overnight gains on Wednesday, helped by stabilising commodity prices and chances of another aid package for Greece, with some market players saying selling based on worries about Greece could subside even though the currency is likely to remain vulnerable.
The euro was at $1.4390 compared with its $1.4348 previous close in the local forex market and the index of the dollar against six major currencies was up 0.01 percent at 74.618 points versus its 74.722 points close on Tuesday.
Hopes of robust dollar inflows towards the Power Finance Corp share sale is expected to support the rupee, dealers said.
The state-owned PFC, which opened its share sale on Tuesday, intends to raise up to $1 billion. The offering closes on Thursday for institutional investors and a day later for retail bidders.
The one-month onshore forward premium was at 25.75 points versus 27.00 points last close. The three-month was at 81.50 points versus 79.00 points previously and the one-year was at 303.50 points compared with 300.50 points.
The one-month offshore non-deliverable forward contracts were quoted at 44.93, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 44.8500, with total volume at $1.51 billion.