Rupee weak as oil importer dollar demand weighs

Rupee weak as oil importer dollar demand weighs

Mumbai: The rupee eased on Wednesday after touching near-one-month-highs in the previous session as volatile domestic shares provided little support and dollar demand from oil importers further weighed on the local unit.

However, dealers said some dollar inflows were likely to support the rupee later in the day.

At 10:23am, the partially convertible rupee was at 45.32/33 per dollar, against its previous close of 45.29/30. It fell to 45.37 per dollar in early deals.

“Right now there are no inflows in the market and the oil bids have come, which is why the rupee is weak. The inflows will come back later in the day and that will support the rupee," a senior dealer with a state-run bank said.

Dealers said the rupee would trade in the range of 45.15-45.38 intraday.

US oil climbed above $87.20 a barrel on Wednesday, led by strong performances in the global stock markets and a surprise draw down in crude inventories in the world’s top oil consumer.

Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market.

Foreign institutional investors bought shares worth $0.14 million on Monday, taking net purchases in three consecutive sessions to $194.35 million, after five straight selling sessions. They have, however, pulled out a net $1.3 billion this year until 7 February.

Traders said dollar inflows were likely to continue for the remaining week, supporting the rupee.

Markets turned positive on Wednesday morning after dropping 1 percent early, on bargain hunting in select counters.

The dollar index, a measure of the greenback’s performance against six major currencies, was down 0.08 percent at 77.934 points.

One-month offshore non-deliverable forward contracts were at 45.53, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, United Stock Exchange and the MCX-SX were all at 45.4525, with the total volume traded on the three exchanges at $991 million.