Rupee closes at 53.72 on heavy dollar demand from oil cos

Dollar demand from importers, mainly oil refiners, to meet month-end dollar needs weighed on the rupee, said forex dealers.

Updated: Oct 23, 2012, 18:22 PM IST

Mumbai: Tracking weak stock markets, the rupee on Tuesday fell by 25 paise to close at 53.72 amid fresh dollar demand, mainly from oil refiners.

At the Interbank Foreign Exchange (Forex) market, the domestic unit opened better at 53.40 a dollar from overnight close of 53.47. It immediately touched a high of 53.34 on initial rise in local stocks but the gains vanished quickly.

Dollar demand from importers, mainly oil refiners, to meet month-end dollar needs weighed on the rupee, said forex dealers.

Though FIIs pumped in around USD 47 million in stocks today, the rupee failed to recover due to overwhelming dollar demand from oil importers as Brent North Sea crude for delivery in December fell to USD 109.21 a barrel.

The rupee fell back to a low of 53.84, before concluding better at 53.72 -- a fall of 25 paise or 0.46 percent.

Dealers said the rupee faced pressure as dollar gained strength in the overseas markets. The dollar index was up by 0.31 percent on weakness in global stocks on reports that credit ratings of five Spanish regions have been downgraded.

"Rupee was seen weakening on account of a recovery in the dollar index and a drop in the Euro. The Euro fell below USD 1.30 whereas Dollar index approached the 80-level.

"After opening on a strong note, rupee could not sustain the appreciation for long and closed on a weaker note," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

Yesterday, rupee had gained 37 paise or 0.68 percent on the back of dollar selling coupled with good FII inflows.

Meanwhile, the Indian stock market benchmark Sensex today closed 83.42 points lower.

The premium for the forward dollar declined on fresh receipts by exporters.

Meanwhile, the benchmark six-month forward dollar premium payable in March ended weak at 133-1/2-135-1/2 paise from yesterday's close of 136-138 paise.

The premium for far-forward contracts maturing in September also declined to 273-1/2-275-1/2 paise from 277-279 paise.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The Eurozone worries continued to dominate as they pushed risk aversion trades in global markets, pulling the dollar index higher and exerting pressure on rupee.

"A weak domestic equity market also weighed on the rupee which reversed most of previous session gains during the day."

The RBI has fixed the reference rate for the US dollar at 53.5895 and for euro at 69.9070.

The rupee also softened against the pound sterling to end at 85.89 from Monday's close of 85.80 and also ended a tad lower at 69.88 per euro from 69.87.

It also dropped against the Japanese yen to 67.24 per 100 yen from previous close of 66.97.

The Forex and Money markets will remain closed tomorrow, October 24, on account of "Dussera".