MUMBAI (Reuters) - The rupee was weaker on Wednesday as banks bought dollars locally to arbitrage in the offshore market, but trade was thin as a two-day strike by state-run bank workers affected volume.
At 10:30 a.m., the partially convertible rupee was at 45.81/83 per dollar, 0.2 percent weaker than 45.72/73 at close on Tuesday.
"There is mostly inter-bank buying today, but volumes are lower as state-run banks are on strike. It is likely to stay in a band of 45.70/45.95," a senior dealer with a primary dealership said.
"There is some pressure on the rupee from the offshore side as well," he added.
One-month offshore non-deliverable forward contracts were quoting at 45.96/46.06, weaker than the onshore spot rate. Banks buy dollars locally and sell in the offshore market to cash in on the price differential.
Indian public sector bank employees began a the strike on Wednesday after talks between their union and the chief labour commissioner failed over demands for wage increases and deferment of stake sales in state banks.
The BSE Sensex opened up 0.5 percent on short covering ahead of the monthly futures expiry, but concerns U.S. lawmakers will stall a proposed $700 billion bailout of the financial sector may limit the gains.
Dealers said there was no dollar demand from oil companies in early trade, but if demand came in during the later half, it could pressure the rupee lower.
Oil, India's biggest import, was trading around $107 per barrel. Refiners are the largest buyers of dollars in the local currency market.
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