Rupee weakens more on rise in importers’ dollar demand

Rupee weakens more on rise in importers’ dollar demand

Mumbai: The rupee extended losses in afternoon trades on Wednesday as importers stepped up dollar purchases and the euro weakened against the dollar.

At 1:45pm, the partially convertible rupee was at 52.38/39 per dollar, 0.7% weaker from Tuesday’s close. It has traded in a 52.03-52.42 band so far.

Traders said there was defence-related dollar buying in the market, as well as demand from oil importers, the largest dollar buyers in the local market.

The euro was trading at $1.3280, compared with $1.3414 at the end of local trade on Tuesday, while the index of the dollar against six major currencies was at 79.275 points versus 78.624 previously.

Oil is India’s biggest import item and oil refiners, the largest buyers of dollars in the local market, step up purchase at month-end to meet payment obligations.

Oil prices rose on Tuesday on a report of improved US consumer confidence, an Italian bond auction attracting demand and after an attack by Iranian protesters on two British embassy compounds in Tehran.

Traders said movement in the euro will also be watched for further direction.

The common European currency barely budged in Asia on Wednesday as the market gave a guarded reception to details on the euro zone’s new lending facility and on proposals to expand funding for the IMF so it could lend to troubled members such as Italy.