Mumbai: Rupee moved in a narrow range with a weakening bias in afternoon trade on Tuesday on lower domestic shares and strong dollar overseas.
At 2:33pm, the partially convertible rupee was at Rs44.45/46 per dollar from Monday’s closing of Rs44.35/36, and moved in a tight range of Rs44.40-44.51. Dollar-buying by importers added to the rupee’s downside, dealers said.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market with their demand tending to peak at the end of each month when they are required to make payments.
Traders are now bracing for the dollar outflows on account of refund of Coal India’s $3.5 billion IPO by end of this month or early November, adding to the rupee’s weakness.
Coal India’s $3.5 billion IPO, the country’s largest, was more than 15 times subscribed last week, giving the government power to price the issue at the top of its range and building momentum for other state offers.
Indian shares were down 0.13% after seesawing in early trade as lower Asian peers made investors wary
Since September, the rupee has risen 5.8 percent thanks to $11.4 billion inflows of the total foreign inflows into equity worth a record $24.4 billion. So far this year, the Indian unit has risen by 4.7%. The inflows were $17.5 billion in 2009.
The dollar gained against the yen, holding above its 1995 record low on Tuesday following reminders from Japanese officials about the possibility of more steps to curb yen strength.
The index of the dollar against six major currencies was up 0.10%.