Indian rupee ends steady; outlook ranged

MUMBAI: The rupee ended little changed on Thursday with support from upbeat domestic shares, but dollar demand from oil importers prevented gains in the local unit.

The partially convertible rupee at 45.60/61 per dollar, little changed from 45.62/63 per dollar at close on Wednesday. It had fallen to 45.65 in early trade.

"The Sensex was strong today and the trade deficit figure also is good for rupee, but crude and inflation figure is worrying and so it seems that the market is confused," said Hari Chandramgathan, a senior foreign exchange dealer with Federal Bank.

Bargain hunting lifted Indian shares for a second day on Thursday after the market had skidded more than 12 percent since the start of January, but traders said the bounce may be short-lived on risk averse global sentiment.

Brent crude rose above $103 a barrel on Thursday after violent clashes in Egypt raised concern of supply disruptions and unrest across the Middle East, overshadowing ample supplies in top consumer the United States.

Oil is India's biggest import and refiners are the largest buyers of dollars in the domestic currency market.

India's food inflation accelerated for the second straight week on rising prices of onions and petrol, while trade deficit in December narrowed to $2.6 billion in December compared with $8.9 billion in November.

"The December trade data was a huge positive. Now the question is whether it sustains or not," said Ananth Narayan G., head of fixed income, currencies and commodities South Asia at Standard Chartered Bank.

Dealers said they expected the rupee to remain rangebound in the near term.

"I expect the rupee to trade in a range of 45.40/46.20 during this month," Chandramgathan of Federal Bank said.

Foreign investors have pulled out $1.5 billion from Indian shares since the start of January following high inflation and rate increases.

One-month offshore non-deliverable forward contracts were quoted at 46.77, weaker than the onshore spot rate, indicating a bearish outlook for the rupee.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange was at 45.7875 per dollar while those on MCX-SX and United Stock Exchange ended at 45.79. Total traded volume was $4.4 billion.