MUMBAI, Sept 27 (Reuters) - The Indian rupee weakened slightly on Friday, pressured by month-end dollar demand from local oil companies, while dollar-rupee far forward premiums retreated as investors pared back bets of another outsized U.S. rate cut.

The rupee was at 83.6850 against the U.S. dollar as of 11:20 a.m. IST, compared to its previous close of 83.6425.

A pickup in the dollar index also weighed on the local currency, while its regional peers were mixed with the offshore Chinese yuan down 0.4% after touching a 16-month high of 6.96.

Consistent dollar demand from local oil companies has contributed to keeping the rupee on the weaker side, a foreign exchange trader at a state-run bank said.

While the rupee had touched a near-three month high of 83.48 last week, it has since trimmed its gains.

The currency has been unable to advance much despite a strong pickup in inflows over September, indicating that the Reserve Bank of India has likely been buying dollars, traders said.

Overseas investors have net bought $10 billion of local debt and equities so far this month, up from $3 billion in the previous month.

The dollar-rupee pair is "is finding solid support around 83.50, with the potential to rise toward the 83.75–83.80 range," Amit Pabari, managing director at FX advisory firm CR Forex said.

Dollar-rupee far forward premiums slipped, with the 1-year implied yield down 4 basis points to 2.37% after strong U.S. economic data prompted traders to pull back bets of a 50 bps rate cut in November.

Markets currently expect a 49% chance of a 50 bps cut by the Federal Reserve at its next meeting, compared to around 60% a day ago.

For the rest of the year, rate cut bets for the rest of 2024 stand at 72 bps compared to 75 bps earlier.

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https://www.reuters.com/markets/currencies/rupee-tad-lower-pressed-by-oil-cos-dollar-bids-forward-premiums-slip-2024-09-27/