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RTRS: Indian rupee edges down on offshore dollar demand
 
India's rupee eased on Tuesday as banks sought to buy the dollar to arbitrage it in the offshore market, but gains in local stocks prevented a sharp fall.

The partially convertible rupee closed at 48.47/49 per dollar, slightly weaker from Monday's close of 48.41/44.

"There was not much happening today as these are year-end markets. They are likely to return to near-normal ... by the second week of January," said a dealer with a private bank.

Dealers said there was some dollar demand from banks looking to arbitrage between the offshore and onshore markets.

One-month offshore non-deliverable forward contracts PNDF were at 48.78/93 per dollar. Banks buy dollars locally and sell offshore to cash in on the price differential.

Indian shares rose nearly 2 percent on Tuesday as expectations of a further interest rate cut lifted financials, while troubled outsourcer Satyam Computer Services (SATY.BO: Quote, Profile, Research) jumped on reports of private equity interest. See [.BO].

Foreign funds have sold a net $13.4 billion worth of Indian equity in 2008, a key factor for the rupee's more than 19 percent fall. They had bought a record $17.4 billion last year.

Demand for the dollar from oil refiners and importers also weighed on the rupee. India imports 70 percent of its oil.
Source