Rupee off highs on oil payment
Apr 13 2012, 16:32 | By Reuters
Rupee was weaker against the dollar.
The rupee trimmed early gains on Tuesday as demand for dollars from oil importers picked up and choppy shares clouded the outlook for capital inflows.
Traders were also cautious as they awaited a meeting between government officials and representatives of rating agency Standard & Poor's, amid downgrade risks caused by slowing growth, high inflation and widening trade deficit.
At 10:41 a.m. (0511 GMT), the rupee was at 51.11-12 to the dollar, stronger than Monday's close of 51.14-15. It initially strengthened to 51.06 after robust Chinese trade data raised hopes for risk appetite.
"There has been demand from oil importers and equities are also quite turbulent, so there is not much direction for the foreign exchange market as of now," said a currency trader with a state-owned bank.
India buys most of the oil it consumes and refiners are the biggest buyers of dollars. For stories on oil, see
Most traders expect the Reserve Bank of India, which has reserves of about USD 295 billion, to step in and curb excess volatility.
The RBI is suspected to have sold dollars on Monday, helping the rupee pull off the day's lows.
The central bank bought USD 1.1 billion and sold USD 1.4 billion in the spot market in February, data released on Monday showed.
India's main share index was up 0.1% in seesaw trade as global growth worries remained despite strong trade data from China.
China reported a USD 5.35 billion trade surplus in March as import growth eased back from a 13-month peak while exports grew faster than expected, customs data showed on Tuesday.
The one-month offshore non-deliverable forward contracts were at 51.6.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange were all at 51.37, on a total volume of USD 543 million.
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