Rupee down on oil demand

The Indian rupee fell on Wednesday, remaining close to record low levels, as oil importers increased their dollar purchases in the closing stages of the month, while wariness in the build-up to a European Union summit lowered demand for risk currencies.

Investors did not spot any intervention from the Reserve Bank of India (RBI) during the session after the country’s central bank was seen widely offloading dollars in the previous four sessions. Those interventions have taken place as the rupee as started to fall back towards record lows versus the greenback, mirroring drops in May. The currency declined to its lowest ever point, 57.32, on Friday.

In addition, the rupee has been unable to gain traction even though the central bank announced measures on India intended to boost the currency, including raising the limits on investments on government bonds for overseas investors.

Essar Services India’s senior forex and treasury manger Edwin Dsouza said he anticipated more intervention from the RBI and potentially further measures to support the rupee. He explained that he expects the currency to trade at 58 against the greenback over the next month and, should that happen, the RBI could intervene with more measures.

The rupee closed at 57.15/16, in comparison with the close on Tuesday of 57.01/02, bringing it near to its record closing low hot on 22 June of 57.16.