Rupee falls for 2nd day; fund flows provide support

By Subhadip Sircar

MUMBAI (Reuters) - The rupee fell for a second session on Monday on dollar demand from private oil firms with the currency finding some support from continued strong inflows into local stocks.

A large private oil company was a major dollar buyer in early session, dealers said, pulling the rupee further away from an over two-month high hit on Friday.

Still, the partially convertible currency found some support from continued strong foreign fund inflows into local stocks which has propelled the shares to a near three-year high.

"The market looks broadly stuck in a range. However, 60.90 seems like a good support for the pair. The dollar may see some more gains from here," said Hemal Doshi, currency strategist at Geojit Financial.

Technically, the rupee is finding support from its 14-day moving average.

The rupee closed at 61.52/53 per dollar compared with 61.27/28 on Friday.

Foreigners bought shares worth 17.24 billion rupees on Friday, marking their biggest single-day buying since September 19 and bringing their total purchase over 11 sessions to 92.82 billion rupees.

The rupee has recovered 12 percent from its life low of 68.85 to the dollar hit on August 28, largely helped by a return of risk appetite to global assets and the central bank's move to attract inflows from overseas Indians.

While the market drew comfort on Friday from the fact that the central bank's oil window remains open, the Reserve Bank of India said it will taper it in a calibrated manner as and when it happens.

The RBI has already reduced its marginal standing facility rate by 125 basis points to 9 percent as it unwinds the extraordinary measures taken since mid-July to stabilise the rupee.

Dealers are now focused on the September U.S. jobs report, due Tuesday, which was delayed due to the shutdown. If the data beats expectations, then speculation over whether the Fed can taper this year or not is likely to return, injecting some volatility in the currency market.

In the offshore non-deliverable forwards, the one-month contract was at 62 while the three-month was at 63.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 61.63 with a total traded volume of $1.65 billion.

(Editing by Gopakumar Warrier)