The Indian rupee weakened on Tuesday as near record oil prices pushed up dollar demand from oil refiners and importers, raising the risk of widening the trade deficit. The partially convertible rupee ended at 42.96/97 per dollar, 0.54 percent weaker than Monday's close of 42.73/74. It hit a 13-month low of 43.21 last week.
Oil firms are the biggest buyers of dollars with their demand tending to peak towards the end of each month. Oil, India's biggest import, traded around $133 a barrel. It hit a record high of $135 last week, raising concerns of a spike in inflation if the government decides to raise fuel prices. "It is the underlying month-end dollar demand from oil companies and importers which is pulling the rupee down," a dealer with a state-run bank said.