MUMBAI: The rupee retreated after rising to a one-week high early on Thursday as gains in the dollar versus major units overseas and demand for
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the U.S. unit from oil refiners weighed.
At 10:40 a.m. (0510 GMT), the partially convertible rupee was at 48.64/65 per dollar, unchanged from its previous close of 48.64/65. In early trade, it firmed to as much as 48.47, its strongest since July 7.
"The market opened stronger but there has been demand from state-run banks possibly for defence-related payment. There may be some oil demand later in the session as well," said Sudarshana Bhat, chief foreign exchange dealer at Corporation Bank.
"Foreign banks would also look to cover their short dollar positions, so the rupee is likely to trade in a 48.55 to 48.70 range today," he added.
The rupee had been riding on a stocks rebound after falling to 49.47 on Monday, which was its weakest since May 15.
The main stock index, which had climbed 6.4 percent over the previous two days, rose more than 1.5 percent early on a rally across Asia after strong Chinese economic growth and upbeat U.S. corporate earnings strengthened hopes for the world economy.
Foreigners have bought shares worth nearly $6 billion so far in 2009, after dumping more than $13 billion last year.
The index of the dollar versus six majors was up 0.3 percent, which dealers said was limiting gains in the rupee. However, most Asian units were stronger than the dollar.
"The outlook is for a stronger rupee, with equity markets globally performing well. We could see 48.20 levels soon if 48.50 is broken significantly, while in a month's time, we could also test 47.80," Bhat said.
One-month offshore non-deliverable forward rupee contracts traded in Singapore were quoted at 48.72/82.
