* Rupee gains to 53.56/57 vs 53.74/75 close on Tues
* Oil-related USD demand caps broader gains
* RBI policy review next week key for direction
By Swati Bhat
MUMBAI, Oct 25 (Reuters) - The Indian rupee rose on Friday,
ending a holiday-shortened week with its first weekly gain in
three, as a revival in global demand for risk prompted foreign
banks to sell the greenback, but dollar demand from oil refiners
limited bigger gains.
Global shares and commodity markets rose on Thursday,
pulling out of their recent slide on the back of encouraging
economic data from Britain and China and the U.S. Federal
Reserve's latest commitment to support growth.
Traders are now eyeing the Reserve Bank of India's policy
review on Tuesday, which will be key in determining whether the
domestic currency can sustain the muted rebound seen this week.
"Asian currencies were appreciating and the dollar was
getting beaten against other majors, which helped the rupee. But
there was persistent demand from oilers," said Vikas Babu
Chittiprolu, a senior foreign exchange dealer with Andhra Bank.
"Next week RBI will be watched for direction. A rate cut
will surely boost the rupee. I am expecting a 53.20 to 53.95
range until the policy with foreign institutional investor
demand for Asian currencies also likely to help the rupee".
The partially convertible rupee closed at 53.56/57
per dollar versus its previous close of 53.74/75.
For the week, the unit rose 0.5 percent, snapping two
previous weeks of falls. Forex markets will be closed on Friday
for the second time this week due to a banking holiday.
Strong dollar demand from oil firms, as is traditional
towards the end of the month, prevented further gains in the
Starting on Monday, the focus is expected to shift to the
central bank's review. Most analysts expect the RBI to keep
rates on hold given inflation remains high, but bond markets are
cautiously pricing in a surprise easing action.
A cut in the repo rate would be well received, raising hopes
for economic growth and potentially sparking stronger foreign
inflows into domestic stock markets.
In the offshore non-deliverable forwards market, the
one-month contract was at 53.83 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 all closed at around 53.64
with a total traded volume at $5.98 billion.
(Editing by Rafael Nam)