Mumbai, Apr 26: Rupee drifted lower by 18 paise to close one month low at 40.10/12 against USD on week ended yesterday, from 39.92 on previous week ended on April 17 (Thursday) on sustained good buying support of Dollar by foreign banks and some oil companies along with bullish phase at Indian bources.
Trading in Forex market resumed on Monday after three day's holiday including Friday Mahavir Jayanti rose to a three-week high at 39.85/86 against US Dollar with a gain of seven paise from its last close of 39.92/92, a leading Forex dealer said. Meanwhile, RBI sucked out Rs 39,705 crore through liquidity adjustment facility on April 22, which held the rupee at its previous level, though there was good inflow of Dollar in the market amidst bouts of selling and buying, he added.
Dealers expect that local unit will have a tendency of getting stronger, though RBI's intervention would hold its appreciation against Dollar.
Indian bourses, which resumed sessions in red, recovered in the afternoon session and ended with positive gap on fresh inflows in capital market.
As banks unwound long positions after RBI increased reserve requirements to fight inflation, Dollar buying by oil firms capped gains, dealers said.
Rupee fluctuated between wide range of 39.95 and 40.20 during the week.
Dealers said, ''Rupee rebounded from a one-month low on last day of the week - Friday, as exporters sold Dollar holdings and on arbitrage by local banks between local and offshore markets.
''Exporters began selling dollars once Rupee went below 40.20,'' one of the traders said, adding that banks bought Rupees cheaper locally to sell the currency in overseas market, cashing in on price differentials.
Traders said they awaited the central bank's policy review on April 29 for an outlook on the Rupee.
''Rupee, broadly speaking, is going to be rangebound till the monetary policy on April 29 (Tuesday),'' the chief trader at a foreign bank said.
Analysts are spilt whether the central bank will raise interest rates, with a slim majority of economists polled by Reuters predicting no change to interest rates.
Meanwhile, RBI fixed the reference rate for US Dollar at Rs 40.18 on week-ended on April 25, up 24 paise from previous week ended on April 17 rate of Rs 39.94 per USD.
The local currency during the week ended on April 25 at 63.60/62 (63.40/42 on previous week level) against the Euro. It closed at 78.64/66 (78.79/81) per unit against the Pound Sterling. The local unit closed at 39.38/40 (39.40/42) per hundred units against the Japanese Yen.