The rupee eased on Monday as commercial demand for dollars picked up on the back of firm prices of crude oil, India's biggest import, and ahead of data showing June's trade deficit had widened to nearly $4 billion. But robust foreign fund inflows into the booming Indian stock market checked losses, traders said.
Data released after close of trade showed India's trade deficit widen to $3.99 billion in June on increased industrial activity driven by demand in Asia's third-largest economy. The deficit stood at $2.56 billion in the same period a year ago. The partially convertible rupee ended at 43.5450/55 per dollar, down from Friday's close of 43.5175/5225. It had gained 0.2 percent last week after touching a near-two-week peak of 43.4975/5075 on Tuesday.
"There was strong demand from oil importers as well as other companies on growing expectations the dollar is likely to rise slowly during the year," said the chief dealer at a private sector bank.
Foreign institutional investors have ploughed about $5 billion into Indian stocks this year, helping the rupee hold its ground. Indian shares surged to a new high on Monday, boosted by a rally in software services firms.
The BSE index closed 1.04 percent higher at 7,347.10 points, a new record, and has gained 19 percent since the end of April.
Foreign capital investment is expected to continue with the economy forecast to grow at about 7 percent this year, bolstering domestic demand and shoring up corporate earnings.
Though oil prices eased on signs of slowing demand, concerns that Hurricane Emily might damage oil infrastructure on the Gulf of Mexico limited the drop.
US light, sweet crude oil futures were trading 25 cents a barrel lower at $57.84 a barrel. Oil rallied on Friday and in early trade on Monday as traders turned their attention to the latest hurricane.
Comments
Comments are closed.