June 20, 2014 / 11:43 AM / 3 years ago

Indian rupee down for 4th straight week; weakness may persist

* Rupee ends at 60.1850/1950 per dlr vs 60.08/09 on Thursday

* Rupee, rupiah lead losses in emerging mkts on Iraq, oil worries

* INR may hit 61 per dlr on mo-end importer dlr demand: trader

By Neha Dasgupta

MUMBAI, June 20 (Reuters) - The Indian rupee ended weak on Friday, posting losses for a fourth straight week as high global oil prices posed a risk to the country’s current account and inflation.

On the week, Indian rupee lost 0.7 percent to the dollar, and was the second-most weak currency in Asia after the Indonesian rupiah, which ended down 1.5 percent on the week.

Traders expect falls in the rupee to continue next week due to month-end dollar demand from importers.

Some traders expect the rupee to weaken to as much as 61 per dollar unless the central bank aggressively steps in to protect the currency if global oil prices continue to stay high.

“On the rupee, 61 per dollar is more likely because of month-end payment demands and there will be increased hedging by importers,” said Samir Lodha, managing director at QuantArt Market Solutions.

The partially convertible rupee ended at 60.1850/1950 per dollar versus its previous close of 60.08/09.

Brent crude held near $115 a barrel on Friday, close to a nine-month high, and was headed for its second weekly gain on increased risks of disruption to supply from Iraq.

India imports nearly two-thirds of its oil needs, and is the world’s fourth-largest oil consumer.

On Thursday, a Reuters poll had showed long positions on the rupee had fallen to their lowest level since late April, as higher oil prices are seen hurting India’s economy and further straining government finances.

On Tuesday, the rupee had slumped to a near-two-month low of 60.55 per dollar but recovered after traders said state-run banks sold dollars, likely on behalf of the central bank.

In addition, exporters also sold dollars, which aided the rupee’s recovery, traders said.

Earlier this week, Reserve Bank of India Governor Raghuram Rajan also assured markets that despite the uncertainty in Iraq India was better positioned to tackle any shocks on the external front.

In the offshore non-deliverable forwards, the one-month contract was at 60.49, while the three-month was at 61.07. FACTORS TO WATCH * Dlr index heads for biggest weekly loss since April on Fed outlook * Ukraine bonds recover; emerging stx head for weekly loss * World stocks just off record peak, eyes on Iraq * Foreign institutional investor flows * For data on currency futures DIARIES & DATA: Indian Data Watch European diary Indian diary US Diary (Editing by Sunil Nair)

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