India rupee steady; dollar demand offsets firm shares
The rupee was little changed in afternoon trades today as gains in domestic shares were offset by importers' demand for dollars on high oil prices.business Updated: Feb 03, 2011 15:42 IST
The rupee was little changed in afternoon trades on Thursday as gains in domestic shares were offset by importers' demand for dollars on high oil prices.
At 2:21 p.m., the partially convertible rupee was at 46.6100/6150 per dollar, after easing to 45.65 in early trades and little changed from Wednesday's close of 45.62/63.
Dealers expect the rupee to move in the 45.50/70 range intraday.
Indian shares rose 1.6% on Thursday, led by gains in banks and software services, but investors were circumspect following an escalation of violence in Egypt that could trigger risk aversion.
Brent crude rose past $103 on Thursday after violent clashes in Egypt raised fears of supply disruptions and unrest across the Middle East, overshadowing the bearish effect of soaring gasoline inventories in top consumer the United States.
Oil is India's biggest import and refiners are the largest buyers of dollars in the domestic currency market.
There has been a fair amount of correction in the equity market and hence foreign institutional investors could come in for bargain buys, which will aid the rupee, dealers said.
Foreign investors have pulled out $1.5 billion from Indian shares since the start of January following high inflation and rate increases.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were at 45.7800, 45.7800, and 45.7825, respectively, with the total traded volume at $2.5 billion.