Rupee under pressure on oil demand

The Rupee today lost 10 paise to close at 51.3 against the US dollar, its lowest level in more than two-month low, due to a higher demand for dollars from the oil importers and weak equity markets.

The Rupee on Monday lost 10 paise to close at 51.3 against the US dollar, its lowest level in more than two-month low, due to a higher demand for dollars from the oil importers and weak equity markets.

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"Rupee was under pressure because of month-end dollar demand from importers-mainly from oil- refiners," said a forex dealer.

India imports 80% of the oil consumed in India and refiners are the biggest buyers of dollars in the currency market, with their demand tending to peak towards the close of each month when they make payments. Going forward the rupee is likely to trade lower against the US dollar.

"Near-term risks in US dollar-rupee remain to the upside given high oil, a very disappointing budget, weaker growth expectations given the lack of policy easing, and slowing capital inflows," said Priyanka Kishore,a forex strategist at Standard Chartered Bank.

Experts believe that the Reserve Bank of India (RBI) will not intervene to check rupee's decline. "We do not expect the RBI to sustain its pace of FX intervention at current levels, preferring to save its firepower for the 52-53 area," said Kishore.