Rupee ends at 1-month high on State bank dollar sales; pressure eases

Reuters: The rupee strengthened to a one-month high, as a State-run bank sold dollars at 133.70, 10 cents lesser than previous session’s close, while some banks sold dollars on hopes that the currency would rise further, dealers said.

Finance Minister Ravi Karunanayake said on Tuesday the spot would climb 3% to a two-year high of 130 per dollar from current levels due to ample dollar inflows.

The spot rupee ended at 133.70 to a dollar, its highest close since 25 May and firmer from Wednesday’s close of 133.80.

Three-month forwards were firmer at 135.25/35 per dollar compared with Wednesday’s close of 135.40/50.

“The rupee is firmer as the State bank lowered the selling rate by 10 cents to 133.70,” said a currency dealer asking not to be named. “There were some bank dollars as well. Importers are waiting for the rupee to appreciate.”

The market expects a gain in the rupee due to expected inflows, but currency dealers have said it was unlikely to appreciate as much as 3% within such a short period.

The Government has called on banks and investment houses to propose terms for a foreign currency term financing facility as it seeks to raise up to $500 million to meet the costs of some externally-funded projects stated in its 2015 Budget.

On Thursday, the Central Bank raised $327 million via development bonds after offering only $100 million.

The rupee has appreciated around 0.37% after hitting a record low of 134.20 on 18 June.