Indian rupee eases on oil demand

20 May, 2006

The Indian rupee headed back towards its lowest level this year on Friday as demand for dollars from oil importers and custodial banks compounded the impact of dollar gains on the global currency market.
The partially convertible rupee was quoted at 45.53/55 per dollar, weaker than Thursday's close of 45.44/46 and nearing this week's 2006 low of 45.64.
"A few custodial banks were buying dollars on behalf of foreign investors. An oil company also bought a large amount of dollars. We have not seen any intervention from the central bank on Friday," said a dealer with a private bank.
Dealers said market sentiment on the rupee had shifted sharply.
"Suddenly, the sentiment for the rupee has turned from positive to negative," a foreign bank dealer said.
The US dollar rose one percent against the Swiss franc and gained ground against the Japanese yen after comments from the head of Bank of Japan sounded a dovish note.

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