The Indian rupee was steady in deals on Wednesday but traders said the local currency could come under pressure later in the day as domestic oil importers step up their month-end dollar purchases.
The rupee was at 45.3500/3650 per dollar, barely changed from its previous close of 45.3575/3650. It has shed just over one-tenth of a percent in the past two sessions amid thin trading volumes. "We expect some oil-related (dollar) buying to come in and, with global crude prices staying firm, we could see some more pressure on local shares and therefore a little pressure on the rupee as well," a dealer at a state-run bank said.
India imports some 70 percent of its crude oil needs and state-run oil firms traditionally step up their dollar purchases towards the end of the month to cover their import requirements. Oil prices remain near 21-year highs set earlier this week.
Traders said dollar inflows in the form of trade-related remittances and foreign investments also remained thin, adding to the pressure on the rupee.
Foreign funds have been net sellers in 14 of the past 15 days as uncertainty spurred by a surprise poll verdict and the resulting change in government hurt sentiment. They sold shares for a net $765 million in the 14 sessions to Friday, before returning to invest a tentative $6.5 million on Monday.
Their net sales to Friday were nearly a fifth of what they had invested in 2004 before political worries set in.
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