Rupee closes weak on import demand

Rupee closes weak on import demand
REUTERS

MUMBAI, MAY 15: The Indian rupee ended weaker, but off lows, on Monday amid demand for dollar from banks and corporates, dealers said. The rupee ended at 43.97/98 to a dollar, off the morning's lows of 44.05 and compared with Friday's 43.92/93.

Dealers said the market would continue to bid the dollar in early trade on Tuesday unless there were aggressive sales by state-run banks, who act on behalf of the central bank.

"Even today a large nationalised bank was selling, butimport interest was sustained," a dealer with a private bank said.

Dealers said corporate demand also led to some paying innear-term forward premia.

Farther maturities should stabilise and flatten if theUnited States hikes rates again at Tuesday's meeting, they said.

Dealers said the market had discounted the likelihood ofMonday's twin government bond auction being fully subscribed and its impact on liquidity.

The Reserve Bank of India will conduct a twin bond auctionof 2003 and 2006 maturity government bonds worth 50 billion Rupees later in the day.

The six-month premium ended at an annualised 2.50 per cent on Monday against 2.44 percent the previous day.