Rupee approached a one-week low on speculation higher crude oil prices are boosting the nation?s import bill.
The currency touched the weakest level since June 17 as local refiners may have stepped up purchases of the greenback to pay for crude oil after the cost of the fuel rose about 9% in the past month. India imports almost three-quarters of the oil it uses and the cost of these purchases reached a 19-month high of $8.1 billion in April, official figures show.
?The rupee is showing a mild weakening bias on Thursday, mainly due to increased dollar demand from oil companies before the end of the month,? said Jaiprakash Israni, a currency trader at Andhra Bank.
The rupee declined 0.7% to 46.495 per dollar, according to data compiled by Bloomberg. It reached 46.4975 earlier, the weakest level since June 17. The currency has declined 3.4% this quarter, a loss second only to that of South Korea?s won among Asia?s 10 most-used currencies.
However, 10-year bonds advanced the most this week, snapping a three-day decline, on optimism monsoon rains forecast by the weather office will help contain rising food prices.
Yields dropped from their highest level in almost a week on speculation the Reserve Bank of India will refrain from raising borrowing costs before a scheduled review next month. The interbank call-money rate touched a three-month high on Thursday as payment of taxes by companies has reduced cash at banks. The yield on the 7.80% note due May 2020 dropped three basis points to 7.5%, according to the central bank?s trading system. The price rose 0.21, or 21 paise per Rs 100 face amount, to 101.58. The interbank call-money rate rose as much as 5.5%, the highest level since March 23 and above the central bank?s lending rate of 5.25%.