The Hindu Business Line : Rupee weakens on heavy dollar buying

MUMBAI: The domestic currency closed 25 paise weaker on Thursday at 44.40/42 per dollar in the forex market against its closing at 44.15/17 on Wednesday .

After opening the day at 44.20/22 the rupee touched an intra-day low of 44.49 following an aggressive bout of dollar buying by State-run banks.

Dealers said that the banks were buying dollars at RBI's behest to meet the payments required to be made by Indian Oil Corporation for acquiring the marketing assets of an oil company in Thailand.

"This coupled with the month-end demand for dollars from both oil firms and other corporates led to a weakening in the rupee," said a dealer with a private sector bank.

Meanwhile, forwards continued to trade at a discount, with the six-month forward closing at - 0.10 per cent (- 0.47 per cent) and the one-year forward closed at - 0.17 per cent (- 0.02 per cent).

Bond prices fell by around 30 paise across the medium and long dated papers in the Government securities market. Dealers said the decline was in reaction to a hardening in the bond yields in the US.

The 8.07 per cent 2017 paper opened at Rs 124.25/30, lower than Wednesday's closing at Rs 124.62. The paper got dealt to a low of Rs 124.05. The 7.37 per cent 2014 paper closed lower at Rs 117.20/25 (Rs 117.38).

Call rates hovered around 4.25 per cent in the inter-bank market. In the seven-day repo under LAF, RBI received and accepted 35 bids amounting to Rs 14,775 at the rate of 4.50 per cent.