Rupee weakens, but gains for second straight week

The Indian rupee weakened for a second consecutive session on Friday as month-end dollar demand from oil firms offset an increased global investor demand for risk that sent other currencies such as the euro higher.

Despite ending the week with mild losses, the rupee notched a second consecutive weekly gain, helped earlier in the week by the rally in the euro and the biggest weekly gain in domestic shares since the week ended October 11.

However, the rupee snapped two months of gains to fall 1.5 per cent in November.

Oil companies have returned to sourcing dollars in markets in November, and away from a special window provided by the central bank, while signs foreign investors were paring their purchases also hit the currency.

Traders said the rupee could see some support after the economy grew more than expected in the July-September

quarter, according to data late on Friday.

But overall, sentiment could remain weak as the central bank ends the special currency swap window to banks raising funds abroad -- which had brought $25 billion in inflows since end-September -- on Saturday.

"The market looks likely to be on a biddish mode once the FCNR (foreign currency non-resident) flows are out of the way, so we could see some rupee weakness," said Uday Bhatt, a foreign exchange dealer with UCO Bank.

The partially convertible rupee closed at 62.44/45 per dollar compared to 62.41/42 on Thursday.

Traders will also continue to monitor moves in the dollar for direction. The index of the dollar against six major currencies was trading down 0.2 percent.

In the offshore non-deliverable forwards, the one-month contract was at 62.90 while the three-month was at 63.92.