The Indian rupee fell in its first session of 2012 on demand from oil importers, though losses were limited by a turnaround in domestic stocks and dollar-selling by foreign banks. Volumes were light in the dollar-rupee market as many investors chose to stay away in the absence of trading in major overseas markets, which were closed for the new year holiday.
The rupee settled at 53.30/31 to the dollar, 0.4 percent down from Friday's close of 53.08/09, after dipping to 53.34 in early trade. "Nothing much can be read from today's market movement given the thin volumes and absence of overseas cues," said Vikas Chittiprolu, a senior foreign exchange with Andhra Bank. "Real action will return in the rupee when markets the world over resume normal trading and positions are initiated for the new year." Traders said the impact on the rupee of the government's decision on Sunday to allow foreigners to directly invest in local equities was muted.
"Though it is a right move in the long-term for supporting dollar inflows, right now when Indians themselves are not willing to touch equities expecting foreigners to push money into the same asset class is a bit tough," said a dealer at a foreign bank.
One-month offshore non-deliverable forward contracts were quoted at 53.79 rupees, indicating more weakness was likely in the short term. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 53.62, with total volume $1.5 billion.
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