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Indian rupee weakens 0.3% to 79.69 as oil companies soak up dollars

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The declined on Thursday due to strong demand for the U.S. dollar from oil companies, while markets braced for a big rate hike from the U.S. Federal Reserve next week.

The partially convertible rupee closed down 0.3% at 79.6975 per dollar, having fallen up to 79.7250 during the session.

Traders do not expect any intervention till the 79.90 levels, so, based on that, have stepped in to buy dollars, a foreign exchange dealer at a private bank said.

There was a lack of inflows in the market compared to the past few sessions, the dealer added.

The rupee snapped a four-day winning streak on Wednesday after hotter-than-expected U.S. consumer inflation data earlier this week bolstered bets of a third large rate hike by the Fed next week.

The rupee is under pressure because a 75 basis point rate hike by the Fed seems most likely and the central bank is expected to give hawkish signals at its policy meeting, a different trader at a Mumbai-based bank said.

The dollar index held its ground, even edging closer to the 110 level.

Meanwhile, Indian equities reversed course to decline 0.4%. Inflows into the stock markets this month have not matched the pace of August.

Foreign investors were net sellers of local shares worth 13.9 billion Indian rupees ($174.43 million) on Wednesday, preliminary official data showed, after being net buyers of $1.2 billion worth of stocks this month through Tuesday.

On the debt side, yields on the benchmark 10-year bond rose 8 basis points to 7.2386%, the biggest jump in six weeks.

($1 = 79.6900 Indian rupees)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)


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