The Indian rupee fell for the first session in seven on Friday as dollar demand from oil importers overwhelmed inflows, although suspected central bank intervention helped the currency recover smartly from the day's low. The rupee ended at 50.32/33 to the dollar, slightly down from Thursday's close of 50.25/26 after moving in a wide band of 50.16 to 50.50 during the day.
Global risk sentiment turned negative as markets focused on talks between Greece and its private creditors, and this also weighed on the Indian currency, dealers said. "Next week is most likely to see choppy trade as the market will wait to see what emerges from the Reserve Bank of India review on Tuesday and the Federal Reserve the day after," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank, who expects the rupee to move in range of 50 to 51 next week. The tussle between oil refiners buying dollars to meet month-end payments and likely RBI intervention to prevent any steep sell-off of the rupee may add to volatility, traders said.
A Reuters poll of 22 economists on Wednesday showed the central bank is unlikely to cut rates when it reviews policy on Tuesday, but nearly all expect a cut by the end of June to boost faltering economic growth. One-month offshore non-deliverable forward contracts were quoted at 50.8, indicating some weakness in the short term in the onshore spot rate. 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 were around 50.47 on total volume of $4.03 billion.
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