Rupee falls on sustained oil demand

The rupee fell on Monday, retreating from a two-and-a-half-month high hit earlier in the session and snapping two sessions of gains, due to sustained

The rupee fell on Monday, retreating from a two-and-a-half-month high hit earlier in the session and snapping two sessions of gains, due to sustained dollar demand from oil refiners.

The dollar demand from oil refiners looking to meet payment obligations offset purchases of the local currency by foreign funds in a session with thin trading volumes because of a US public holiday.

However, the rupee recovered some losses in late trade after a finance ministry official said that import duty on gold and platinum has been raised to 6 per cent from 4 per cent.

Gold imports constitute a key demand for dollars in the domestic currency market after oil.

A global risk-on environment, expectations of interest rate cuts from Reserve Bank of India and the government's recent fiscal consolidation steps have spurred gains in domestic shares that have attracted foreign flows.

Inflows into Indian stocks are already at $2.45 billion so far in 2013, coming on the back of sustained capital flows of over $24 billion in the previous year.

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