INDIA RUPEE-Rupee falls to more than 1-month low on state-run banks, oil firms' dollar buys

Credit: REUTERS/FRANCIS MASCARENHAS

By Jaspreet Kalra

MUMBAI, March 19 (Reuters) - The Indian rupee closed weaker on Tuesday, after slipping to its lowest in more than a month during the session, pressured by weakness in its Asian peers and dollar demand from state-run banks, traders said.

The rupee INR=IN closed at 83.0350 against the U.S. dollar, weaker by 0.16% compared with its close at 82.9050 in the previous session. The local unit touched an intraday low of 83.0450, its weakest level since Feb. 14.

Persistent dollar demand from state-run banks, likely on behalf of importer clients, hurt the rupee alongside an uptick in the dollar index, a foreign exchange trader at a state-run bank said.

Local oil companies were also seen buying dollars through much of the day's session, the trader said.

The dollar index rose 0.4% to 104.06, its highest in nearly three weeks, while Asian currencies fell, with the Korean won and Philippine peso down 0.5% each, leading losses.

The Japanese yen fell 1% to 150.62 after the Bank of Japan moved to end eight years of negative interest rates on Tuesday.

The rupee is unlikely to see "significant downside" from current levels with 82.90 and 83.10 serving as the immediate resistance and support, respectively, for the local unit, Arnob Biswas, head of foreign exchange research at SMC Global Securities said.

Meanwhile, dollar-rupee forward premiums dropped, with the 1-year implied yield falling to a low of 1.58%, its weakest in more than three months.

A drop in the dollar-rupee overnight swap rate and positional adjustments heading into the U.S. Federal Reserve meeting drove down the forward premiums, traders said.

The Fed is widely expected to keep rates unchanged on Wednesday but the new 'dot plot' and Chair Jerome Powell's remarks may offer clues on when the central bank may begin easing policy rates.

(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)

((jaspreet.kalra@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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