Rupee Eases On bunched Dollar Outflows

Rupee Eases On bunched Dollar Outflows

MUMBAI: The Indian rupee weakened on Tuesday on bunched-up dollar outflows as the U.S. market reopens after an extended weekend holiday, while choppy shares offered little clear direction on the outlook. 

At 11:27 a.m. (0557 GMT), the rupee was at 52.91 to the dollar, 0.35 per cent weaker than Monday's close of 52.7250/7350. 

Dollar demand from oil importers will set the trend for the rest of the day, though overall activity is seen subdued as most banks prepare to close account books for the quarter. 

"Outflows will be relatively higher than inflows given the holiday in U.S. on Monday and should keep rupee under some pressure," said a dealer with a foreign bank. 

"But the overall volume is likely to stay low due to the prevailing festive mood in major overseas markets and year end caution here." 

Traders said volumes have also been hit after the central bank slapped trading limits to curb speculation after the rupee slumped a record low of 54.30 on Dec. 15. 

News that Japan and India are inching closer to a dollar swap agreement did not make a splash as traders await the actual deal announcement and inflows. 

"It is obviously positive in terms of dollar inflows. But let the flows first happen," said a dealer with another foreign bank. 

One-month offshore non-deliverable forward contracts were quoted at 53.4, indicating more short-term weakness in 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 around 52.95, with the total volume at $835 million. 

The Reserve Bank of India has struggled to contain the rupee's weakness because of a large current account deficit, slowing domestic growth and outflows from the stock market.