Rupee trims rise as oil payments pick up

The rupee erased most early gains on Thursday after oil import payments picked up, but higher shares, firmer euro and exporter sales should help the Indian unit, traders said.

At 10:47 am (0517 GMT), the partially convertible rupee was at 45.30/31 per dollar, stronger than 45.3475/3550 at close on Wednesday when it had during trade hit 45.4275, its weakest since February 25

"The view was that rupee should strengthen due to dollar's losses overnight," said a dealer with foreign bank. "It was oil firms' dollar bidding that pushed the rupee back from 45.20."

Most traders expect the rupee to move in 45.18-45.35 range during the day.

Crude oil is India's largest import item and domestic oil refiners are the biggest dollar buyers in the local currency market.

Brent crude futures rose above USD 115 a barrel on Thursday, supported by a weaker dollar and an unexpected drop in US distillate stocks that overshadowed gains in gasoline and crude inventories last week.

The euro advanced to a one-week high against dollar as strong commodities prices and a report that China is interested in buying "bailout bonds" for Portugal spurred active stop-loss buying of the single European currency.

The euro was at USD 1.4160 and the index of the dollar against six major currencies was at 75.586 points. At the end of local forex trade on Wednesday, the euro had been at USD 1.4071 and the dollar index at 75.986 points.

The main stock index was up 0.7% tracking firmer Asian markets.

The one-month onshore forward premium was at 22 points against 21.50 points previously. The three-month was at 70 points versus 69.75 and the one-year was at 263.50 points against 256.75.

The one-month offshore non-deliverable forward contracts were quoted at 45.51, 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 MCX-SX and the United Stock Exchange were all at 45.3025, with the total volume at USD 2.33 billion.