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Rupee weakens on import payment; policy eyed

Rupee weakens on import payment; policy eyed
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First Published: Tue, Jul 28 2009. 10 18 AM IST
Updated: Tue, Jul 28 2009. 10 18 AM IST
Mumbai: The rupee edged lower on Tuesday morning as dollar demand from refiners to make month-end payments weighed and traders watched the stock market for cues on capital flows ahead of the central bank’s monetary policy review.
The Reserve Bank of India is expect to hold key rates steady at its quarterly review, which will be announced at about 11:15am.
At 10:05am, the partially convertible unit was at Rs48.29/30 per dollar, 0.3% weaker than its Monday’s close of Rs48.16/17.
“The market is expecting a status quo to be maintained on the rates front, but a slightly hawkish statement in terms of the central bank highlighting concerns over inflation,” said Ashtosh Raina, head of foreign exchange at HDFC Bank.
Other dealers said some month-end dollar demand from importers and oil refiners was weighing on the local unit. Oil is India’s biggest import and refiners the largest buyers of the US dollar in the domestic currency market.
Shares flip-flopped in early trade, tracking mixed signals from other Asian markets and as investors awaited the outcome of the policy review.
Foreigners have bought $1.7 billion worth of shares so far in July, taking net inflows this year to $6.8 billion.
One-month offshore non-deliverable forward contracts were at Rs48.27/37, almost steady with the onshore spot rate.
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First Published: Tue, Jul 28 2009. 10 18 AM IST
More Topics: Rupee | India | Markets | Dollar | Currency |