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Rupee dips to 11 months low on dollar’s rise, importer demand

Rupee dips to 11 months low on dollar’s rise, importer demand
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First Published: Thu, Aug 25 2011. 12 25 PM IST
Updated: Thu, Aug 25 2011. 12 25 PM IST
Mumbai: The rupee plunged to its weakest in more than 11 months on Thursday, tracking broad gains in the dollar as well as a rise in dollar demand from local oil companies for making month-end import payments and for clearing outstanding dues to Iran.
Volatile domestic equity markets also offered little solace to the rupee, traders said.
At 11:11 am, the partially convertible rupee was at 46.18/19 to a dollar, 0.4% weaker from Wednesday’s close of 45.99/46.00, its weakest level since 16 September.
“There is a lot of dollar buying related to oil. But there is strong support for the rupee around 46.20-46.25 level,” said a senior forex dealer with a foreign bank.
“Now, if this support fails, rupee could weaken to 45.40.” So far, the rupee has moved in wide band of 46.000-46.215.
The dollar was firm against major currencies and could eke out further gains after a short-covering rally the day before, as investors fret that the US Federal Reserve may not signal new stimulus for the economy this week.
The index of the dollar against six major currencies was up 0.06% at 74.059 points, well above 73.734 points at the end of the local forex trade on Wednesday.
The euro was at $1.4407 from $1.4462 previously.
India is estimated to owe around $5 billion to Iran for its oil imports and state-run banks have been buying dollars aggressively for the past few weeks to repay the dues.
Iranian media reports had said earlier that India would settle all its oil debts to Iran by this month end.
Oil is India’s largest import item and oil refiners are the biggest buyers of dollars in the local forex market.
The one-month onshore forward premium was at 8.50 points, steady from Wednesday, the three-month was at 35 points from 37 points and the one-year stood at 131.25 points, from 141.
The one-month offshore non-deliverable forward contracts were quoted at 46.35, 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 46.1900. The total volume was at $2.71 billion.
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First Published: Thu, Aug 25 2011. 12 25 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |