Rupee weaker on euro fall, dlr buys for Iran oil dues

02 August 2011 | 21:02 Code : 15075 Latest Headlines

The Econimic Times-- The Indian rupee eased on Tuesday as state-run banks stepped up dollar purchases for domestic oil firms' payments to Iran and as Asian stocks turned negative on weak U.S. manufacturing data that sparked worries over the strength of the global economy.

At 11:24 a.m. (0554 GMT), the partially convertible rupee was at 44.2400/2425 per dollar, 0.4 percent weaker from its 44.07/08 previous close.

A robust outlook on dollar inflows and rising interest rates are, however, expected to limit any weakness in the local currency, traders said.

In July, foreign funds invested $1.7 billion in Indian equities and over $500 million in local debt securities, data from the capital markets regulator Securities and Exchange Board of India showed.

"Rupee is surviving despite the dollar buying for oil as inflows are strong and are expected to stay so thanks to the rising rate differential and steady economic growth," said a foreign exchange dealer with a state-owned bank.

"43.80 is a key resistance level for the rupee and if it is broken, we could see a move to 43.30," the dealer added.

On Monday, Reserve Bank of India Governor Duvvuri Subbarao stuck to his anti-inflationary stance despite signs of slowdown in economic growth.

New Delhi owes Tehran around $5 billion on account of oil supplied by the latter and both countries have struggled to find ways to settle the payments after the RBI halted a clearing mechanism under U.S. pressure.

Iran is now receiving the payments for its oil exports to India through a Turkish bank to get around U.S.-led moves to isolate the Islamic Republic, industry sources said on Monday.

The euro was at $1.4250 versus $1.4431 at domestic currency market close on Monday, but the index of the dollar against six major currencies was up 0.08 percent to 74.325 points from 73.618 points.

Asian shares fell on Tuesday on concerns about the health of the global economy after sluggish U.S. manufacturing data, while a strengthening yen prompted speculation that Tokyo may intervene in the markets to curb the currency.

U.S. manufacturing grew at its slowest pace in two years in July, the Institute for Supply Management said, casting doubt on expectations the faltering recovery would quickly regain steam. For details, see

The one-month onshore forward premium was at 21 points from 23.75 on Monday, while the three-month was at 61.75 points from 66.50 and the one-year was at 212.50 points from 220.50.

One-month offshore non-deliverable forward contracts were quoted at 44.39, weaker than the onshore spot rate.

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 at 44.3850. The total volume stood at $4.62 billion.