India rupee closes flat, upside limited by oil dollar demand

Nov 26 2013, 18:42 IST
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The partially convertible rupee ended steady at 62.50/51 per dollar compared to its close on Monday. Reuters The partially convertible rupee ended steady at 62.50/51 per dollar compared to its close on Monday. Reuters
SummaryIndian rupee traded slightly stronger for most of the session against the US dollar.

The Indian rupee closed unchanged on Tuesday against the US dollar, after having traded slightly stronger for most of the session helped by a globally weaker American currency, as month-end demand for dollar from oil firms weighed.

HIGHLIGHTS

* Indian rupee ends unchanged at 62.50/51 per dollar

* Intermittent oil demand limits sharp upside in rupee

* Traders expect the pair to hold in 62.35-62.50 range

Trading in Indian rupee was largely range-bound as hopes on Monday that Iran's nuclear deal with world powers would lower oil prices were tempered by doubts about how quickly the accord would translate into higher supplies.

Lower oil prices benefit India by helping contain inflationary pressures and narrowing the current account deficit.

Rupee Dollar today November 26

Instead, shares fell on Tuesday, with continued concerns about whether a recent surge in buying from foreign institutional investors would slow.

Markets Top Gainers, Markets Top Losers

"There were some small dollar inflows which helped the rupee but 62.25-62.30 levels remain crucial," said A. Ajith Kumar, a senior foreign exchange dealer with Federal Bank.

"If Indian rupee holds these levels we would continue to see a 62.35-62.50 range as at every dip oil firms may come in to buy. Euro and crude will be watched for direction," he added.

The partially convertible rupee ended steady at 62.50/51 per dollar compared to its close on Monday. The pair moved in a range of 62.28 to 62.5350 during the session but was largely wedged between 62.35 and 62.45 levels for most part of the day.

The index of the dollar against six major currencies was down 0.2 percent, hurt by lower U.S. yields and giving a fillip to the euro that has so far proven resilient to talk of looser monetary policy by the European Central Bank.

In the offshore non-deliverable forwards, the one-month contract was at 62.96 while the three-month was at 63.99.

FACTORS TO WATCH

* Dollar weakens, pushes euro towards recent peaks

* Oil rises above $111, Iran sanctions relief unclear

* Foreign institutional investor flows

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