(Reuters) - The rupee weakened in lacklustre trade on Thursday as the domestic stock market pulled back from a rally, while major Asian markets were closed for a holiday.
At 10:15 a.m. (0445 GMT), the partially convertible rupee was at 45.71/72 per dollar, 0.3 percent weaker than 45.58/59 at close on Wednesday when it had risen during trade to 45.44, its strongest since May 14.
"Not much action expected today as most Asian markets are closed. I see the unit trading in a range of 45.50-45.70," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
The U.S. dollar was on the defensive in Asia as talk the Federal Reserve will soon start printing more of the currency drove down Treasury yields and dragged it to a five-month low on the euro.
The index of the dollar against six majors was little changed, while Asian currencies were trading mixed.
Stock markets in Japan, China, Hong Kong and South Korea are closed for a holiday.
Dealers said the rupee would mirror moves in the local stocks. Foreigners have moved $4.1 billion into Indian shares this month, taking net investment so far in 2010 to nearly $17 billion.
Last year, record inflows of $17.5 billion had pushed the rupee up 4.7 percent on year.
The main stock index was trading down 0.5 percent after a recent steep run up.
"We may see a gradual pick-up in trading volumes once London opens. I doubt the rupee will go below 45.55 today as the market looks biddish. These are good levels for importers to buy dollars," the head of forex desk at a private sector bank said.
Oil refiners are the largest buyers of dollars in the domestic currency market, with their demand tending to peak at the end of each month, when they make payments on imports.
One-month offshore non-deliverable forward contracts were quoted at 45.87, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were all at 45.7175, with the total traded volume on the three exchanges at about $1.5 billion.
(Reporting by Swati Bhat; Editing by Ranjit Gangadharan)
