Rupee pares gains on choppy local shares

Rupee pares gains on choppy local shares

Mumbai: The rupee lost most of its early gains on Friday as dollar demand from oil importers for month-end payments grew stronger and as domestic equities turned choppy.

Traders said the rupee would come under pressure later in the session as the mood in global financial markets stayed cautious on worries that Europe’s debt crisis will linger for many more months, which could offset comfort from signs of improvement in the US job market.

The number of Americans filing new claims for jobless benefits hit a 3-1/2 year low last week, bolstering views that the economy was gaining momentum, even though third-quarter growth was revised down.

“Dollar demand from oil companies will come in. There is no way it can be pushed off given the fast-approaching month-end," said Naveen Raghuvanshi, an associate vice-president of foreign exchange at Development Credit Bank.

“Domestic equities too look shaky, so rupee could fall to 52.80-52.85 during the day."

Oil is India’s biggest import item and consequently, oil refiners are the biggest buyers of dollars in the foreign exchange market.

Traders said volumes in the dollar-rupee market have fallen sharply due to a combination of the RBI’s curbs on trading limits and caution ahead of book closures on 31 December.