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Rupee down on risk aversion, dollar demand

Rupee down on risk aversion, dollar demand

Mumbai: The rupee fell on Monday on month-end demand from oil importers and a defence-related payment, and as risk aversion sparked by the swine flu outbreak pushed the dollar and yen higher in overseas markets.

The currency ended at 50.23/25 per dollar, off an intraday low of 50.31, and about 0.8% weaker than Friday’s close of 49.81/82.

“State Bank of India was buying dollars for a defence payment. Month-end oil demand was there," said a dealer with a state-run bank.

Oil refiners, the biggest buyers of dollars in the local market, raise their purchases towards the end of each month to meet import payments. Oil, which traded below $50 (Rs2,500) a barrel on Monday, is India’s biggest import.

A 0.4% gain in the stock market, which has now risen more than 40% from its 2009 low in early March, could not lift the rupee. Rising equities helped drive the rupee to a two-month high of 49.34 in mid-April on expectations foreign investors would return to Indian assets.

Dealers said the dollar’s broad strength in overseas markets also weighed on sentiment. The dollar index, a gauge of the US unit’s performance against major currencies, was up about 0.6%.

One-month offshore non-deliverable forward contracts were quoting at 50.42/52, weaker than the onshore spot rate.

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