* Rupee ends at 53.84/85/dlr vs 53.41/42 close
* INR down 0.8 pct on day, 1.9 pct on week
* USD demand from oil, defence weighs
By Swati Bhat
MUMBAI, Oct 19 (Reuters) - The Indian rupee slumped to a
one-month loss on Friday to post its biggest weekly decline in
four months on the back of huge dollar buying from state-run oil
and defence companies, along with demand from foreign banks.
Oil companies, the largest buyers of dollars in the domestic
currency market, were spotted buying the greenback through the
session, more than offseting the large dollar sales from
The rupee remains vulnerable for more falls, with a break
above 54 seen possible in next week's short trading week,
particularly if the euro retreats due to the continued
uncertainty about whether Spain will request a bailout.
"Past couple of days state-run banks have been buying
dollars for oil as well as for the government for defence
payments," said Pramod Patil, a foreign exchange dealer with
United Overseas Bank.
"This is a good level for exporters to sell. I expect
exporter selling to continue above the 54 level if that is
breached as well," he added.
The partially convertible rupee closed at 53.84/85
per dollar, compared to its close of 53.41/42 on Thursday. The
rupee weakened at one point to as much as 53.99, its weakest
since Sept. 21.
The rupee lost 0.8 percent on the day and 1.9 percent on the
week, marking its biggest weekly loss since the June 22 week.
Since the start of the rupee's fall after a five-week rally,
the rupee has lost 3.7 percent of its value over 10 sessions.
Traders broadly predict a 53.00 to 54.50 range for the pair
next week. For technical outlook, double click
Traders also said there was good dollar buying from foreign
banks who had large "buy orders" from the greenback from their
customers in the offshore market.
"A lot of short-USD positions were stopped out with the move
above 53.80, which lead to massive dollar receiving," said a
senior non-deliverable forwards dealer based in Singapore.
The one-month offshore NDF rate was at around 54.16 while
the three-month was at 54.70.
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 closed at around 53.99 with
a total traded volume of around $7.15 billion.
(Editing by Rafael Nam)