June 01, 2012 / 18:58 IST
The rupee strengthened on Friday on the back of dollar sales by corporates but it still posted a ninth consecutive weekly drop, its worst losing streak since the Lehman crisis.
Traders said a mid-sized infrastructure company sold about USD 200 million in early trade while two foreign banks also sold dollars heavily, helping the rupee gain.
"There was corporate dollar sales followed by NDF unwinding. Market seems to believe that yesterday's rumour about oil companies is right and that led to some long dollar unwinding," said Hari Chandramgathan, a forex dealer with Federal Bank.
On Thursday, market participants were flooded with messages via text, email and messengers that the RBI had asked oil companies to buy dollars only via four state-run banks and only at one particular rate in an hour's time.
The market talk was however denied by senior officials from the RBI as also the oil companies.
Yet, traders said that the RBI has also not ruled out opening a dollar sale window for oil companies.
"When the news is out that oil firms are in the market, all banks go long dollars. Now looks like they are approaching fewer banks and the panic situation is no longer seen now," a treasurer at a foreign bank who did not wish to be named said.
Traders said the rupee could continue to rise next week as a fall in global crude oil prices would allow oil companies to cut back on dollar purchases.
Brent crude fell below USD 100 per barrel for the first time since October 2011.
The partially convertible rupee closed at 55.54/55 per dollar, 1% stronger than its Thursday's close of 56.08/09. The unit traded in a broad range of 55.53 to 56.28 during the day.
The unit, however, fell 0.3% on the week, adding to eight straight weekly losses, making it the rupee's worst losing streak since the week ending 26th October, 2008.
Concerns have increased among rupee investors after India's March quarter GDP growth slowest to its lowest in a decade.
That led to a raft of downgrades by banks and brokerages, with most growth estimates for the current fiscal year cut to below 6.5%.
"Concerns on inflation, growth, twin deficits, all exist but still the rupee can strengthen further next week to 55 to the dollar level," Federal's Chandramgathan said.
One-month offshore NDF contracts were quoted at 56.24 while the three-month NDFs were at 56.99.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 56.11 on a total volume of USD 5.7 billion.
