India’s rupee dropped, snapping a five-day gain, on speculation oil refiners stepped up demand for the dollar to pay for crude. The currency retreated from the strongest level in two months as oil prices in New York declined for a second day. India imports almost 75 percent of the commodity to meet local consumption. The trend is still for the rupee to appreciate on capital inflows, said Vikas Babu at Andhra Bank. “We are seeing oil importers purchasing dollars,” said Babu, a Mumbai-based foreign-exchange trader at Andhra Bank. He predicted the rupee will climb to 44.20 by the end of this week. The currency declined 0.2 percent to 44.52 per dollar as of 10 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 44.335 yesterday, the strongest level since May 3. Crude fell 0.2 percent to $94.74 a barrel today in New York, following a 0.5 percent drop on July 1. U.S. markets were closed yesterday for the Independence Day holiday. Overseas investors bought $1.4 billion more Indian stocks than they sold last week, according to exchange data. Offshore forwards indicate the rupee will trade at 45.04 to the dollar in three months, compared with expectations of 44.90 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. To contact the reporter responsible for this story: Khalid Qayum in Singapore at kqayum@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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