Rupee weakens as importers, oil cos buy dollars

Rupee weakens as importers, oil cos buy dollars

Mumbai: The Indian rupee fell on Thursday on month-end dollar demand from importers and oil companies, and traders said while the central bank had not intervened in early deals they expected it to step in on any sharp falls.

At 10:28 am the partially convertible rupee was at Rs46.23/24 per dollar, 0.6% weaker than Rs45.95/96 at close on Wednesday.

“The dollar-rupee started its uptrend yesterday and that is just continuing today. There is some month-end demand from importers and oil firms and we don’t have the state-run banks in the market due to the strike," said a dealer with a private bank.

The central bank has been selling dollars in the market in recent months to stem losses in the rupee, which hit a two-year low last week.

India imports nearly 70% of its oil needs and refiners are the largest buyers of dollars in the local currency market, with their demand tending to peak at the end of each month.

Oil steadied below $106 a barrel as falling US inventories were countered by further evidence of slowing demand in the United States, the world’s largest energy consumer.

Dealers said they were also watching the stock market for clues on fund flows. The main share index opened up 0.2% but soon turned negative as caution lingered over the prospects of the US government’s $700 billion financial sector bailout plan.

Volume in the Indian market is expected to be low due to a two-day strike by state-run bank employees that began on Wednesday, when volume dropped to about a third of the daily average.