India rupee falls as importers, refiners buy dlrs

(Updates to close)

By Swati Bhat

MUMBAI, July 7 (Reuters) - The Indian rupee weakened on Monday as gains in stocks were not enough to counter dollar buying from importers and oil refiners as well those arbitraging differentials with offshore forwards.

The partially convertible rupee <INR=IN> ended at 43.295/305 per dollar, 0.3 percent weaker compared with Friday's close of 43.15/16. It hit a 15-month low of 43.50 last week.

"There was a mix of factors which pushed the rupee lower today: importers and oil refiners buying dollars, as also non-deliverable forward-related dollar buying," a senior dealer with a private bank said.

Oil CLc1, India's biggest import was trading above $143 a barrel, close to record levels hit last week, and refiners are the biggest purchasers of dollars in the Indian market.

The dollar hit 1-½ week highs against a basket of major currencies on Monday, driven in part by speculation that comments from G8 officials could push oil prices away from last week's record highs. See [ID:nL07728726]

One-month offshore non-deliverable forward contracts PNDF were at 43.66/76 per dollar, weaker than the onshore rate. Dealers said some players were buying dollars in the local market and selling them offshore to cash in on the wide differential.

Indian shares rose 0.5 percent on Monday but there was little conviction for a recovery as the market shed most of the day's gains with investors bracing for an interest rate rise. See [.BO]

Foreign funds have been net sellers of $6.7 billion worth of Indian shares this year, helping push the rupee down 9 percent so far in 2008. Last year, when they bought a record net $17.4 billion of shares, the rupee rose more than 12 percent. (Editing by John Mair)