Mumbai: The partially convertible Indian rupee weakened on 27 May as oil refiners stepped up their dollar buying to meet their month-end import payments, but remained comfortably above 13-month lows hit last week.
At 10.04 a.m, the rupee was quoted at 42.86/87 per dollar. It hit a 13-month low of 43.21 last week.
Oil refiners are the biggest buyers of dollars in the currency markets, as nearly 70% of India’s total oil needs are imported and the demand for dollars generally tends to peak towards the end of each month.
“The rupee is weaker mainly due to oil buying, but it is also a good level for the exporters to sell dollars so I do not see the rupee weakening beyond 42.90/94 levels today,” a dealer with a state-run bank said.
Oil hit a record high above $135 a barrel last week, and its surge has raised concerns about inflation pressures, particularly if the government has to raise state-set retail fuel prices.
The rupee has fallen 8% so far this year, making it Asia’s weakest currency against the dollar after the Korean won and the Pakistani rupee. It gained more than 12% in 2007.
India’s main stock index opened up 0.65% and extended gains in early deals. It has so far lost more than 19% this year, after having risen 47% in 2007 when record foreign buying of stocks also helped boost the rupee.