India’s rupee weakened for the third day this week on speculation importers increased purchases of dollars to pay for oil. Crude reached $78.15 per barrel yesterday, the highest level in more than two weeks, raising costs for the nation’s oil refiners. India’s imports rose an average 50 percent during the first five months of 2010, after contracting 29 percent during the year-ago period, government data show. “The rupee is showing a mild weakening bias because dollar demand is stronger in the local market as well as in offshore forwards,” said Jaiprakash Israni, a currency trader in Mumbai at state-owned Andhra Bank. “Importers are buying dollars.” The rupee dropped 0.1 percent to 46.7225 per dollar as of 10:33 a.m. in Mumbai, according to data compiled by Bloomberg. It is the worst performer this month among Asian currencies, with a 0.6 percent loss. The currency may trade between 46.65 and 46.85 today, Israni predicted. Offshore forward contracts indicated the rupee will trade at 47.30 to the dollar in three months, compared with expectations for a rate of 47.26 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non deliverable contracts are settled in dollars. India’s current-account deficit widened to a record $13 billion in the quarter ended March 31 as growth in imports outpaced exports. Barclays Plc predicts the annual shortfall will widen 15 percent in the financial year that began April 1 to $44 billion. To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net

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