The Indian rupee lost all of its intraday gains towards the close of trading on Tuesday as oil companies and corporate borrowers ramped up buying of dollars. Oil refiners are the largest buyers of dollars in India's foreign exchange market as the country imports more than 80 percent of its oil requirements.
Some companies were also buying dollars to repay maturing foreign currency convertible bonds (FCCBs), traders said. "There is corporate dollar buying for FCCB redemptions while dollar demand by oil firms is also adding to rupee weakness," said Hari Chandramgathan, a dealer at Federal Bank in Mumbai.
The rupee closed at 49.3050/3150 to the dollar, after touching 49.05, its highest level since February 8, according to Thomson Reuters data. It closed at 49.27/28 on Friday ahead of a market holiday on Monday. However, traders said the undertone remained bullish on expectations of continued robust dollar inflows into Indian debt and equities. Indian shares climbed to their highest close in nearly seven months on Tuesday.
The market will watch for dollar inflows to buy shares in Multi Commodity Exchange Ltd, which opened its initial public offering for institutional investors on Tuesday, traders said. One-month offshore non-deliverable forward contracts were at 49.30. 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 around 49.39, on total volume of $4.24 billion.
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