Rupee Halts Three-Day Gain as Oil Importers Seen Buying Dollars

  • India's currency erases advance of as much as 0.2 percent
  • Rupee is down 0.7% this year in Asia’s worst performance

The rupee declined for the first time in four days on speculation oil companies stepped up dollar purchases before holidays.

The currency fell 0.3 percent to close at 66.6450 per dollar in Mumbai, prices from local banks compiled by Bloomberg show. It rose as much as 0.2 percent earlier on optimism forecast of normal monsoon rains will ease price pressures. The rupee is down 0.7 percent in 2016 in Asia’s worst performance. Indian foreign-exchange and bond markets are shut Thursday and Friday.

“Dollar demand from oil importers ahead of the holidays probably drove the the rupee down,” said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. The dollar’s rebound also weighed on the Indian currency, he said.

The rupee’s 0.4 percent advance over the past three trading sessions coincided with the dollar’s retreat. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose 0.6 percent on Wednesday.

Consumer prices rose 4.83 percent in March from a year earlier, the slowest pace in six months and less than the 5.26 percent gain in the previous month, official data showed after the close of markets on Tuesday. The weather department’s forecast on Tuesday for the first above-average monsoon in three years spurred optimism better farm output will check price pressures and pave the way for further cut in interest rates.

Government bonds fell, with the yield on January 2026 notes rising two basis points to 7.44 percent, according to the central bank’s trading system.

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