* Rupee ends at 53.41/42 per dollar vs 52.87/88
* Dollar buying from oil, defence firms weighs on rupee
* USD/INR seen in 53.10-53.60 range on Friday - trader
By Swati Bhat
MUMBAI, Oct 18 (Reuters) - The Indian rupee weakened to its
lowest level in three weeks on Thursday as large dollar demand
from oil firms late in the session weighed but gains in the
domestic share market prevented a much steeper fall.
Traders said oil firms, the largest buyers of dollars in the
domestic currency market, stepped up purchases hurting the local
unit as oil prices held on to gains.
Oil held above $113 a barrel as Chinese economic data
signalled stabilisation in the economy of the world's
second-largest oil consumer while concern over supplies in the
Middle East provided support.
"There was good buying from oil companies. Some stop-losses
were also triggered around 53.20 levels, so tomorrow we may see
the pair rising to 53.60," said Hari Chandramgathan, a senior
forex dealer with Federal Bank.
"Broadly, I am expecting a 53.10 to 53.60 range tomorrow,"
he said, adding there was also some buying seen from gold and
defence firms which may continue on Friday.
The partially convertible rupee closed weaker at
53.41/42 per dollar versus its previous close of 52.87/88. The
unit dropped as low as 53.43 during the session, its weakest
since Sept. 27.
Traders said dollar selling by custodian banks looking to
invest in shares seen during the day had helped match the dollar
demand from oil firms, but post the stock market close, oil
demand pushed the rupee lower.
Shares rose as auto makers and property developers
gained on hopes of increased sales of big-ticket items during
the looming festival season, while lenders rose on hopes of
higher retail loan demand.
Traders expect the rupee to broadly move in a 52.50 to 54.00
band until the central bank's policy review on Oct. 30 with
views split on whether or not the central bank chooses to cut
rates. A rate cut will however boost the rupee in the short-term
as equities would rally.
In the offshore non-deliverable forwards market, the
one-month contract was at 53.66 while the three-month was at
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 53.42 with
a total traded volume of around $5.6 billion.
(Editing by G.Ram Mohan)