Mumbai: The rupee erased all early gains to turn weak on Wednesday as the onshore forward premiums crashed on fears of dollar shortage.
The perceived dollar shortage was most likely due to outflows related to local oil firms’ payments to Iran, dealers said.
New Delhi is estimated to owe around $4 billion to Tehran for its oil imports.
Positive local equities, however, limited the rupee’s fall, traders said. At 2:26 p.m., the partially convertible rupee was at 45.25/26 per dollar, weaker from 45.205/215 on Tuesday, when it had touched an 11-week low of 45.40.
Thus far, the rupee has moved in a wide 44.95-45.29 band. The one-month onshore forward premium was at 2.50 points, after falling to as low as (-)2.00 points, its lowest in 34 months, from 14.75 points on Tuesday.
The three-month was at 18.75 points, after plummeting to as low as 9.25 points, last seen nearly 34 months ago, from 46.50 points last close.
The one-year onshore forward premium was at 115.50 points, after easing to 90.50 points, the lowest in nearly 15-months, from 156.50 points at previous close.
Markets rose more than 2%, snapping a six session losing streak and tracking Asian stocks, after the US Federal Reserve’s promise to keep interest rates near zero for two more years stemmed a global equity rout.