Rupee ends off lows; seen weak in the near-term

The rupee ended off the day's low on Tuesday as local shares pared losses and exporters stepped in to sell dollars, although worries over further foreign fund outflows weighed.

The partially convertible rupee closed at 45.2050/2150 per dollar, 0.5% weaker than Monday's close of 44.965/975, but off the day's low of 45.40 - a level last seen on May 25.

"Basically, it is tracking the equity market. The equity market came off their lows," said Ashtosh Raina, head of foreign exchange trade at HDFC Bank.

In the near-term, the rupee is likely to remain weak and is broadly seen moving in a 44.70-45.50 band, he said.

The BSE Index pared losses to 0.78%, after falling as much as 3.3%earlier.

"Selling from exporters has seen the rupee off lows," said Vikas Chittiprolu, a senior forex dealer with Andhra Bank.

Traders said the risk-off sentiments could halt for a while if Fed policymakers announce measures at the FOMC meeting at 1815 GMT on Tuesday that would soothe the market.

"There were some rumours that FOMC tonight would be positive, in the sense that they would announce something that would calm the market," said a trader with a foreign bank.

Demand for dollar from oil refiners for payment of import dues to Iran weighed on the rupee. On Monday, Iran said it had so far received USD 1.4 billion from India in the last 10 days for long overdue oil debts.

Brent crude shook off sharp losses to gain over USD 1 on Tuesday, supported as investors edged back into riskier assets after a sharp sell off in recent sessions. By 1139 GMT, Brent crude was up USD 1.15 at USD 104.89, having minutes earlier touched the day's high of USD 105.35.

The Swiss franc surged to new all-time highs against the euro and the dollar in volatile trade on Tuesday, while the Japanese yen held firm as concerns about a global slowdown and a rout in stock markets drove investors to seek safe-haven currencies.

The euro was at USD 1.4259 after touching USD 1.4288 earlier. It had been at USD 1.4257 at end of domestic currency market trade on Monday.

The index of the dollar against six major currencies was down 0.46% at 74.448 points. It was at 74.540 at close on Monday.

The one-month onshore forward premium was at 14.50 points from 20 points on Monday, the three-month was at 46.25 points from 57.50 and the one-year onshore forward premium was at 156.50 points from 178.

One-month offshore non-deliverable forward contracts were quoted at 45.44, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and the MCX-SX were at 45.2950, while those on the United Stock Exchange was at 45.2900. The total volume was at USD 18.12 billion.