Mumbai : India's rupee dropped, nearing a one-week low, on speculation higher crude oil prices are boosting the nation's import bill.
Local refiners may have stepped up purchases of the greenback to pay for crude oil after the cost of the fuel rose about 9 per cent in the past month. India imports almost three-quarters of the oil it uses and the cost of these purchases reached a 19-month high of $8.08 billion in April, official figures show.
"The rupee is showing a mild weakening bias today, mainly due to increased dollar demand from oil companies before the end of the month," said Jaiprakash Israni, a currency trader in Mumbai at state-owned Andhra Bank.
The rupee declined 0.2 per cent to 46.2725 per dollar as of 10:24am in Mumbai, according to data compiled by Bloomberg. It yesterday reached 46.36, the weakest level since June 17. The currency has lost 2.8 per cent this quarter, a loss second only to South Korea's won among Asia's 10 most-used currencies.
Offshore forward contracts indicated the rupee will trade at 46.75 to the dollar in three months, compared with expectations for a rate of 46.68 yesterday. Forwards are agreements to buy or sell assets at a set price and date.
