MUMBAI: The Indian rupee hit a three-week low on Friday on persistent demand for dollars by oil importers, while a subdued response to the government's sale of shares in Oil and Natural Gas Corp was taken an indication that foreign inflows may weaken.
The rupee closed at 49.50/51 to the dollar after hitting 49.56, its weakest since Feb. 10. It closed at 49.21/22 on Thursday. The weekly loss was the first in three weeks.
"If the inflows do not pick up, the rupee is poised to weaken further," said Vikas Babu, a foreign exchange trader at state-run Andhra Bank.
"However, the Reserve Bank of India could step in to curb the rupee's losses at around 49.75 levels," he said.
The government's failure to sell all the shares in its $2.5 billion auction of a five percent stake in ONGC was a setback to its plans to unload shares in state firms to help trim a ballooning fiscal deficit.
The next support for the rupee was seen at 49.75, a trader at a private bank said.
With India importing about 80 percent of its oil needs, the recent rise in global oil prices has pushed up demand for dollars in the local market, particularly from refiners.
Traders said choppy domestic shares also hurt the rupee. The main stock index closed 0.3 percent higher.
One-month offshore non-deliverable forward contracts were at 49.96.
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 all closed around 49.82, on a total volume of $4.1 billion.
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