Re snaps 3-session winning streak, declines vs $

MUMBAI: Despite resuming on a strong note on the back of good FII investment in the public offering of the largest private sector bank ICICI Bank, the rupee declined by four paise to 40.80/81 against the US currency, snapping three-session winning streak.

In quiet trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened strong at 40.70/72 a dollar from Monday's close of 40.77/78 per dollar.

It later touched a high of 40.69 a dollar following firm equity market and oversubscription of ICICI's follow-on public offer within an hour of opening today.

Strong equity market, where the benchmark Sensex closed up by 215 points, aided the rupee sentiment in early trade.

However, dollar buying by oil refinery companies to meet their import requirements in lieu of spiralling global crude oil prices forced the rupee to close lower at 40.80/81 a dollar.

Light, sweet crude for July delivery remained near USD 69 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-morning in Singapore.

Initially, fresh dollar demand from importers boosted the rupee sentiments, forex dealers said adding "the currency also drew support from expectations of heavy capital inflow, mainly through the equity market route."

There was not much intervention by the Reserve Bank to cap the rupee's surge.

The RBI fixed the reference rate for the US currency at Rs 40.70 per dollar and for the single European unit at Rs 54.65 per euro.

The rupee premiums on forward dollar ended further lower due to sustained receiving by exporters.

Benchmark six-month forward dollar premiums payable in November ended at 49-51 paise, down from 53-55 paise on Monday and the far-forwards maturing in May closed lower at 104-106 paise from 107-109 paise previously.

In cross-currency trades, the rupee moved down further against the British sterling, while closed fractionally up against the euro.

The Indian unit dropped further against the sterling to Rs 81.03/05 from overnight close of Rs 80.81/83 per pound while ended slightly higher against the single European currency at Rs 54.66/68 per euro from Rs 54.68/70 per euro previously.

The rupee, however, held steady against the Japanese yen to close at Rs 33.03/05 per 100 yen.