Mumbai: Indian rupee bounced off lows on Thursday but still remained weaker, pressured by choppy shares and rising import payments and traders said the outlook was hazy.
At 11:06am. the partially convertible rupee was at 44.55/56 per dollar after declining to Rs 44.60, and weaker than Rs 44.465/475 at close on Wednesday.
Traders said a firm euro and dollar sales by companies helped the rupee pull off around 44.60 low for the second day.
“There is no real follow through buying coming in equities so until that happens and the resistance near 44.50 is broken convincingly, the rupee will stay rangebound,” a senior foreign exchange dealer at a large private-sector bank said.
He said there was support at 44.60 but the outlook for equities, which have fallen for eight days in a row, cast a shadow on foreign fund flows.
Foreign portfolio investments in shares have been a key driver for the rupee over the past few years.
Demand from oil refiners, the biggest buyers of dollars in the local forex market, will also determine the trend for the rupee.
The euro hovered near a 17-month high against a struggling dollar on Thursday as investors looked for the European Central Bank to reinforce expectations of higher rates after its policy meeting later in the day.
The index of the dollar against six major currencies was down 0.1 percent at 72.958 points while the euro was at $1.4866.
At end of trade in the local forex market on Wednesday, the euro had been at $1.4853 while the index of the dollar was at 73.054 points.
The thr one-month onshore forward premium was at 25.50 basis points (bps) versus 26.50 bps at its previous close. The three-month was at 80 bps from 82.75 bps and the one-year was at 316.75 bps compared with 321.75 bps.
The one-month offshore non-deliverable forward contracts were quoted at 44.81, 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 44.7375 , with total volume at $1.94 billion.