The rupee eased on Monday to a one-week closing low, side-stepping a rebounding stock market, on robust demand for dollars from oil importing firms, dealers said.
Traders said slowing foreign fund investment also pushed down the rupee, which shrugged off the bomb blasts at the weekend in the capital, New Delhi, in which 59 people were killed. "The blasts did not have a huge impact as these things keep happening," said a chief dealer in a private sector bank. "But foreign funds inflows are slowing and the rupee will be under pressure for some time to come."
Traders said steady demand from oil importers forced many banks to cut short dollar position, leading to downward pressure on the rupee, which analysts say is overvalued by 7 percent on a trade-weighted basis.
The partially convertible rupee ended at 45.1450/1550 per dollar, down from Friday's close of 45.08/085 and its lowest close since October 24, when it ended at 45.16/17.
The local currency has lost 2.5 percent this month as foreign funds have pulled more than $700 million out of stocks and importers have stepped up dollar purchases on a widening trade deficit. Banks are shut on Tuesday for Diwali and traders said uncertainty about how the US currency would behave once local markets reopened on Wednesday, also led to some banks building dollar positions.
The euro held steady against the dollar but remained within last week's trading ranges as investors waited for fresh trading clues from European Central Bank and Federal Reserve meetings in coming days.