Mumbai: The Indian rupee weakened by four paise versus the US dollar on Thursday due to dollar demand from local oil companies and state-run banks amid volatility in oil prices.
The rupee closed at 83.56/$1 on Thursday, marginally lower versus the previous close of 83.52/$1 the previous day, Reuters data showed.
Oil marketing companies are buying crude in anticipation that the commodity might rise further, causing the rupee to weaken. Brent crude oil prices were up 0.06% to $85.13 per barrel from yesterday, Reuters data showed.
A rise in crude oil prices poses upside risks to Indias’ trade deficit and inflation as the country is a major importer of the commodity.
The local currency traded in a tight band in the first half of the session, but weakened due to bids from public sector banks, a foreign exchange trader said.
The rupee opened stronger at 83.50/$1 at the start of the day, and closed weaker at 83.56/$1, according to Reuters.
Yields of the 10 year benchmark government securities remained stable. The yields stood at 6.98% today, versus 6.97% the previous day, according to CCIL.
Market participants expect the yields to be range bound until the budget is announced on 23rd of this month.
“US inflation data is expected on Thursday, and India inflation data is expected on Friday. But these will not have a major effect on the yields as these numbers are already priced in”, said a bond trader at a Primary Dealership.
