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Rupee falls on oil demand; no sight of RBI
June 27, 2012 / 12:42 PM / 5 years ago

Rupee falls on oil demand; no sight of RBI

MUMBAI (Reuters) - The rupee fell on Wednesday, staying near record lows, as oil importers stepped up their dollar purchases at the end of the month, while caution ahead of a European Union Summit sapped demand for risk currencies.

Rupee notes different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Traders did not spot any Reserve Bank of India (RBI) intervention in the session after the central bank was widely seen as having sold dollars in each of the four previous sessions.

Those interventions have come as the rupee has resumed declines to record lows against the dollar, mirroring declines in May. The currency hit its lowest ever at 57.32 on Friday.

The rupee has also failed to gain traction despite measures announced by the central bank on India to bolster the currency, including raising the investment limits on government bonds for foreign investors.

Edwin Dsouza, senior manager of forex and treasury at Essar Services India, said he expected more RBI intervention and potentially more measures to support the currency.

“I expect the rupee to trade at 58 to the dollar in the next one month. If that happens, the RBI may come in with more measures,” he said.

The rupee settled at 57.15/16, compared to Tuesday’s close of 57.01/02, and bringing it close to a record closing low of 57.16 hit on June 22.

One-month offshore non-deliverable forward contracts were quoted at 57.55, reflecting expectations for further weakness ahead.

Global risk sentiments will also play a key role in determining the rupee’s fortunes, especially as European Union leaders meet for a two-day summit starting on Thursday.

The euro steadied against the dollar on Wednesday after hitting a two-week low the previous day, but looked vulnerable to losses as the gathering is not expected to deliver new measures to ease the region’s debt crisis.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the United Stock Exchange and the MCX-SX all ended at 57.4650. The total volume was at $3.31 billion.

Editing by Rafael Nam

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