Rupee closes weak against dollar

The rupee turned weak and ended lower at 40.9750/9850 against the US currency on good dollar buying by banks, despite eight straight session winning streak in equity markets. In active trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened slightly better at 40.86/87 per dollar on smart rally in stock markets. But it failed to maintain the level and dropped to a low of 40.99 per dollar before ending the day at 40.9750/9850 a dollar, sharply down from yesterday's close of 40.88/89 a dollar. Dealers attributed fall in the rupee to fresh dollar demand from some banks and oil refinery companies to meet their import requirements. India's oil import growth touched the lowest level of 5.33 per cent in the last five years. Oil imports, most of which comprises crude, were valued at $19.87 billion between April and July 2007-08 against $18.87 billion for the comparable period of last year. World crude oil prices remained high above $74 a barrel in Asian trade on Tuesday. Foreign Institutional Investors (FIIs) pulled out nearly $1.9 billion in the month of August, dampening the rupee sentiment. Greenback supplies were affected on Tuesday due to a holiday in the US markets yesterday, forex dealers said. However, the local currency is expected to remain strong in the near future on the back of strong economic growth, low inflation rate and expectation of increased capital inflows, a leading banker commented. Meanwhile, the benchmark Sensex today surged by another 43 points. The Reserve Bank of India fixed the reference rate for the US currency at Rs 40.91 per dollar and for the single European unit at Rs 55.72 per euro. The rupee premium on forward dollar improved further on sustained paying pressure from banks and corporates. The benchmark six-month forward dollar premiums payable in February ended at 23 - 25 paise, slightly better from 22 - 24 paise on Monday and the far-forwards maturing in August ended sharply higher at 66 - 68 paise from 51-1/2 - 53-1/2 paise previously. In cross-currency trades, the rupee moved down against the British sterling and the Japanese yen while rose against the euro. The local unit eased against the British sterling and ended the day slightly lower at Rs 82.50/52 per pound from overnight close of Rs 82.45/47 per pound and also dropped against the Japanese yen to Rs 35.49/51 per 100 yen from previous close of Rs 32.29/31 per 100 yen. However, the Single European currency to closed higher at Rs 55.66/68 per euro from last close of Rs 55.72/74 per euro.