Rupee Slips on Speculation Indian Importers Bought Dollars to Settle Bills.

India’s rupee weakened for a second day on speculation the nation’s importers purchased dollars to settle month-end bills.

The currency extended a weekly loss as local refiners may have bought the greenback to pay for costlier crude-oil imports after the commodity gained 2.3 percent last week, the most in more than a month. Monthly oil shipments from abroad averaged $7.9 billion during the first half of this year, compared with $4.9 billion in the year-ago period, government data show.

“The rupee was pressured lower in afternoon trading by oil-related dollar demand,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai.

The Indian currency declined 0.1 percent to 46.91 per dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It lost 0.5 percent last week.

The rupee rose earlier on optimism government data due tomorrow will show economic growth accelerated in the three months through June.

Gross domestic product rose 8.8 percent from a year earlier, the best period of growth since the three months ended December 2007, according to the median forecast of 27 economists in a Bloomberg News survey. The economy expanded 8.6 percent in the quarter ended March.

“Anecdotal evidence suggests the economic growth figures will be pretty strong,” said Naveen Raghuvanshi, a currency trader at Development Credit Bank Ltd. in Mumbai. “And if that happens, the rupee has to appreciate as it may help inflows into the economy.”

Offshore forward contracts indicate the rupee will trade at 47.13 to the dollar in a month, unchanged from the end of last week. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

Source : bloomberg.com