The rupee gave up mid-session gains to close 13 paise higher at 62.31 against the US currency on Monday after the RBI said the entire dollar demand from oil marketing companies was back in the market.
Dollar sales by banks and exporters and foreign capital inflows into the equity market supported the rupee.
The rupee resumed higher at 62.35 per dollar from the previous close of 62.44 on the interbank foreign exchange market and firmed up to 61.96, a two-week high.
The currency failed to maintain the gains on dollar demand from importers, mainly oil refiners, and ended at 62.31 per dollar, a rise of 0.20 per cent.
“Rupee started its weak trend as RBI announced that the oil marketing companies have started accessing the forex market for their dollar demand. This return of OMCs to the market is likely to put pressure on the rupee,” said Abhishek Goenka, CEO of India Forex Advisors.
The Reserve Bank of India said state-run oil refiners returned to the foreign exchange market last week to meet all their dollar requirements. A swap window, which had been made available to the refiners since August end, will open on rare days, when there is a pronounced spurt in dollar demand, the central bank said.
The RBI also said $ 34 billion was mobilised from special concessional dollar swap windows opened in September for deposits by non-resident Indians and overseas foreign currency borrowings by banks. The swap windows were closed on November 30.
India’s current account deficit narrowed to $ 5.2 billion, or 1.2 per cent of GDP, in the July-September quarter after a turnaround in exports and a decline in gold imports, the RBI said after the market closed.
The gap between the outflow and inflow of foreign exchange was $ 21 billion, or 5 per cent of GDP, in the second quarter of the previous financial year.