Pares early gains on dollar demand from importers, oil refiners
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The Indian rupee trimmed early gains against the U.S. currency on Thursday, weighed down by dollar demand from importers and oil companies.
The rupee was quoted at 79.81 per U.S. dollar, as of 0458 GMT, compared with 79.90 in the previous session. The local currency had opened stronger at 79.68, supported by a fall in oil prices and a recovery in most Asian currencies.
"Importers are taking advantage of the dip (in USD/INR pair) and there has been persistent demand from oil refiners," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Mumbai-based Mecklai Financial is advising importers to hedge whenever the net hedge rate (spot +forwards) is available below 80. At a spot rate near to 79.70, importers can buy forward hedges below the 80 level up to October-end.
Brent crude futures tumbled over 5% on Wednesday to their lowest in more than seven months. Hurt by concerns over the global economic outlook, Brent has fallen below $90 a barrel from $110 at the end of July.
Asian currencies recovered, helped by a pullback in the dollar index. The dollar gauge dropped to 109.75, weighed down by a fall in Treasury yields and improved risk appetite. It had reached a multi-year high of 110.57 in intraday trade on Wednesday.
Market participants across the globe are awaiting a European Central Bank rate decision later in the day and U.S. Federal Reserve Chair Jerome Powell's comments at a Cato Institute conference. The ECB is expected to raise rates by 50 basis rates or 75 basis points to tame inflation.
Rupee forward premiums dipped slightly, while Indian shares rose.
