The Indian rupee ended steady on Tuesday as demand for dollars from oil importers was offset by expectations of capital flows into the stock market. The partially convertible rupee ended at 44.270/280 per dollar, easing from an early high of 44.25, which was its strongest since January 5, to be level with Monday's close.
"Overall the sentiment is still favourable for the rupee - and the most positive factor is that oil prices continue to remain below $55 a barrel," said the chief dealer with a foreign bank.
India imports about 70 percent of its oil needs, and lower oil prices reduce the risk of widening the trade deficit, providing support for the rupee. Oil prices last week hit a 19-month low, taking losses since the end of last year to 15 percent.
Traders said they were also watching capital inflows into the stock market for cues about the rupee's direction. "Subdued international crude oil prices ... record industrial production numbers and a rebound in the stock market would ensure that Indian assets gain favour among (foreign institutional investors). Capital from other sources is also likely to keep flowing in and will help the rupee," ABN Amro Bank said in a recent note.
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