Rupee eases to 44.18 against dollar

The rupee eased on Monday from a more than 5.5 month high struck in the previous session.

The Indian rupee eased on Monday from a more than 5-1/2 month high struck in the previous session,as weakness in domestic shares dimmed the outlook for foreign fund inflows. Traders awaited industrial output data at 0530 GMT for further cues.

At 10:34 a.m.,the partially convertible rupee was at 44.18/1900 per dollar,weaker than 44.07/08 at close on Friday when it hit 43.98 during trade,its highest since Oct. 15.

8220;There is some dollar short-covering and shares are also weaker,8221; said Ashtosh Raina,head of foreign exchange trading at HDFC Bank in Mumbai.

After the European Central Bank ECB raised rates last week,investors had started buying the rupee on the back of gains in the euro.

The euro had risen to a 15-month peak versus the dollar on Friday after the ECB raised rates by 25 basis points on Thursday,its first increase since the 2008 financial crisis,and signaled it8217;s ready to tighten further if needed.

Indian shares eased 0.3 per cent on Monday in the absence of clarity from Asian peers and as investors awaited industrial output data.

The index of the dollar against six major currencies was down 0.2 per cent at 74.919 points,compared with 75.138 points at the close of the local forex trade on Friday.

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Traders said oil refiners were buying dollars. Oil is India8217;s biggest import and refiners are the main buyers of dollars in the local forex market.

Foreign funds have bought shares worth more than 3 billion since the start of March,after being net sellers in the first two months of 2011.

Industrial output probably rose 5.2 per cent in February from a year earlier,picking up pace from the previous month on higher exports,the median forecast in a Reuters poll showed.

The one-month onshore forward premium was at 26.50 basis points,higher than 25.50 on Friday. The three-month was at 81.50 basis points from 81 basis points and the one-year was at 306.5 from 305.

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The one-month offshore non-deliverable forward contracts were quoted at 44.29,weaker than the onshore spot rate.

In the currency futures market ,the most traded near-month dollar-rupee contracts on the National Stock Exchange was at 44.3050 and the MCX-SX and the United Stock Exchange were at 44.3050,with the total volume at about 1.6 billion.