Mumbai: The Indian rupee weakened against the dollar on persistent demand for the US currency from state-owned banks, likely on behalf of oil companies. Trade was thin as foreign exchange dealers awaited fresh cues ahead of the release of the minutes of the US federal open market committee (FOMC) meeting on 29 and 30 October which will be released later on Wednesday. At 2.50pm, the rupee was trading at 62.5238 per dollar, down 0.24% from the previous close of 62.3750. It had opened at 62.28 and touched a high and a low of 62.2425 and 62.6312, respectively. Dollar demand from oil companies which constitutes more than half of the demand in the local foreign exchange market, had been shifted to a special off-market window by Reserve Bank of India (RBI) after the rupee plunged to a record low of 68.85 in August. Since January, the rupee has weakened 12.05% and has lost the third most among Asian currencies after the Indonesian rupiah and the Japanese yen. However, in a press conference last week, RBI governor Raghuram Rajan said that “majority� of the dollar demand from oil companies is back in the market. “State-owned banks are buying most likely on behalf of oil companies, besides that there is nothing much to do in the market today. Trade is quiet as we are also approaching the end of the year,� said a dealer with a French bank. Trade in global financial markets usually becomes thin towards the end of the year after the onset of the holiday season which begins with the Thanksgiving Day, this year falling on 28 November. The dollar index, which measures the US currency’s strength against major currencies, trading at 80.625, down 0.1% from the previous close of 80.704 The 30-share BSE benchmark Sensex lost 0.23% to 20,842.74 while the National Stock Exchange’s broader 50-share Nifty lost 0.27% to 6,186.35 points. The yield on the benchmark 10-year bond rose 7 basis points to 9.08%. The overnight call money rate dropped 0.5 basis point to 8.75% from previous close of 8.8%.

Source