Rupee weakened further to 51.22 at close, after opening at 50.80. The main reason for the rupee’s weakness is the month-end dollar demand from oil companies and other importers. The weakness in the euro also added to the pressure against the rupee, said dealers.
“Oil companies have been buying dollars for their settlement of their March bills,’ said a forex dealer with a public sector bank.
These levels were last seen in January. It had closed at 50.67, on Wednesday.
In addition to oil companies and importers, dollar demand was also seen from traders looking to take advantage of the arbitrage in the non-deliverable forwards market, said the dealer.
Dealers said they expect the Reserve Bank of India to intervene if the rupee weakens sharply during the day.
Although foreign institutional investors are buying in the equity market, dollar demand continues to be strong. So, the central bank would do its bit to ensure that dollar demand matches supply, dealers said.
