Rupee ends off highs as importer dollar demand weighs

The rupee snapped a three-day losing streak on Wednesday supported by the euro's gains against the dollar, but demand for the greenback from oil importers and weak local shares pulled it off highs.

The partially convertible rupee ended at 44.43/44 per dollar, after rising as much as 44.3650 intra-day, compared with its 44.51/52 close on Tuesday.

"The euro has gone up like anything, that reflected in the opening. After that, when the month-end dollar demand surfaced, the rupee came down a little bit," said NSS Mani, chief dealer at State Bank of Travancore.

He expects the rupee to trade in a range of 44.30-44.50 per dollar on Thursday, if the Federal Reserve holds US interest rates steady.

The dollar fell broadly on Wednesday and looked set to remain pressed due to expectations the Fed, which is due to announce its rate decision at 1630 GMT, will stick with its ultra-loose monetary policy and point to continued low interest rates.

The index of the dollar against six major currencies was down 0.16% at 73.711 points during the close of local trade, compared with its 73.918 points close on Tuesday.

The euro was at USD 1.4677 when the local markets closed.

Dollar demand from oil importers, the top buyers of the dollar in the domestic market, weighed on the rupee.

Brent crude oil edged above USD 124 a barrel on Wednesday as support from a weaker dollar countered rising US inventories.

Indian shares dropped for a third straight session and closed 0.5% lower on Wednesday, amid steady world stocks, with dropping nearly 3% as the third-largest software firm's tepid growth forecast let down investors.

The one-month onshore forward premium was at 27.00 basis points (bps) versus its previous close of 28.75 bps. The three-month was at 81.50 bps versus 82.50 bps and the one-year was at 313.00 bps compared with 318.00 bps.

The one-month offshore non-deliverable forward contracts were quoted at 44.69, weaker than the onshore spot rate.

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 were at 44.7075, 44.7100 and 44.7125 respectively, with total volume at USD 6.60 billion.