MUMBAI: The Indian rupee touched its weakest level in nearly nine months on Monday, dragged by dollar demand from domestic oil refiners for import payments as well as bunched up outflows following last Friday's local forex and bond markets holiday.
But any intervention from the central bank to prop up the rupee was unlikely unless the unit weakened sharply from the current level, traders said.
Strong Asian currencies and local share gains, however, could underpin the local unit's sentiment, they added.
"It is too early to take a call on intervention. It (rupee) did slide sharply at open, but has settled down after that. So unless we see a big drop from here...I think the central bank will let the rupee be," said a dealer with a private-sector bank.
The Reserve Bank of India (RBI) has maintained that it would intervene in the forex market only to reduce volatility.
At 11:41 a.m. (0612 GMT), the partially convertible rupee was at 45.96/97 per dollar, after dipping to 46.10, its weakest since Nov. 30. It had opened at 45.9250 after closing at 45.735/745 on Thursday.
"Oil payments are continuing. Rupee should see support around 46.15 level, mostly from exporters and resistance around 45.90," said a senior foreign exchange dealer at a big private-sector bank.
Indian refiners will settle all oil debts to Iran by the end of this month, an Iranian business daily reported on Sunday.
New Delhi is estimated to owe around $5 billion to Tehran for its oil imports.
The euro was at $1.4366 versus $1.4360 at end of domestic currency market on Thursday, while the index of the dollar against six major currencies was 74.066 points from 74.076 points previously.
The benchmark 30-share main share index was up 0.04 percent in choppy trade after shedding nearly 2 percent on Friday.
The one-month onshore forward premium was at 9 points from 7.50 points on Thursday, the three-month was at 33.75 points from 30 and the one-year was at 139.50 points from 140.25.
The one-month offshore non-deliverable forward contracts were quoted at 46.105, 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 45.9575. The total volume was at $3.35 billion.
Copyright Reuters, 2011
Comments
Comments are closed for this article.