The Indian rupee weakened on Monday as demand for dollars from some corporates and banks looking to arbitrage in the offshore markets weighed, with a fall in the local share market adding to the pressure. The partially convertible rupee closed at 48.84/85 per dollar, 1.2 percent weaker than its Friday's close of 48.27/29.
One-month offshore non-deliverable forward contracts were at 49.12/22, weaker than the onshore spot rate. When the gap between the local and offshore market is wide, investors buy dollars in the spot market and sell in the offshore market to arbitrage the differential.