MUMBAI, Dec 28 (Reuters) - The Indian rupee weakened on Wednesday owing to strong dollar demand from oil companies to meet month-end payments and on account of defence related payments.
Weakness in the local share market added to the selling pressure on the rupee, traders said.
At 10:12 a.m. (0442 GMT), the rupee was at 53.21/22 to the dollar, 0.4 percent weaker than Tuesday's close of 53.015/025, and most dealers expect a range of 52.90 to 53.30 on the currency for the day.
"Oil and defence related dollar buying is being persistent today. We could see the rupee fall to 53.30," said a foreign exchange trader at a private-sector bank.
India imports more than three-fourth of its daily crude oil requirements and consequently, local oil refiners are the biggest buyers of dollars in the foreign exchange market.
Traders, however, expect the overall turnover in the dollar-rupee market to be lower than the usual $2 billion to $3 billion given banks' reluctance to take bulky positions ahead of the quarter end.
Curbs on banks' trading limits imposed by the central bank around two-weeks ago to help rein in speculation on the currency, which hit a record low of 54.30 on Dec.15, were also keeping volumes low in the local forex market, they said.
One-month offshore non-deliverable forward contracts were quoted at 53.79, 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 traded around 53.23, with the total volume at $732 million.
Source : in.reuters.com