Re snaps 4-day advance as importers buy dollars

 The rupee reversed gains as crude oil in New York touched an all-time high of $147.27 a barrel on July 11, increasing demand for dollars from refiners. Accelerated growth in India's imports this year widened the nation's trade deficit to a record in May, government data show.

``Dollar demand picked up as soon as the rupee crossed the 42.80 mark,'' said Agam Gupta, head of trading at Standard Chartered Plc's Indian unit in Mumbai. "Importers appear to have found those levels quite attractive to buy dollars."

 The rupee fell 0.1 percent to 42.9225 per dollar at the 5 p.m. close of trading in Mumbai, according to data compiled by Bloomberg. The currency gained 0.7 percent last week, the most since the five-day period ended March 28. It touched 42.71 on July 11, the strongest level since June 26.

India's spending on imports grew an average 39 percent a month this year, compared with 25 percent in 2007, according to government data. The nation's trade deficit averaged $22.5 billion a quarter in 2007-08, the year ended March 31, compared with $16.8 billion the previous year, central bank data show.

The rupee gained earlier on speculation a Japanese drugmaker brought in funds to pay for a local acquisition.  The currency advanced as much as 0.2 per cent to 42.78 a dollar as Daiichi Sankyo probably paid for a controlling stake in India's biggest drugmaker Ranbaxy Laboratories, said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. Daiichi last month agreed to buy 50.1 per cent of Ranbaxy for $4.6 billion. "Banks have been selling dollars probably as they expect the big corporate fund inflow to continue," Bhatt said.  The rupee may strengthen to 42.72 in coming days, according to Bhatt.