Rupee marginally up on dollar sales

Reuters: The rupee ended slightly firmer on Tuesday as foreign banks and some exporters sold dollars, but dealers expect the strength to be short-lived on lingering concerns after the central bank last week changed its intervention policy.

The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, dealers said.

Rupee forwards were active, with two-week forwards ending at 150.45/55 per dollar, slightly firmer from Monday’s close of 150.60/75.

“There was dollar selling today by exporters,” a currency dealer said, asking not to be named.

There were some project-related offshore inflows to a foreign bank, another dealer said, while some others said a few foreign banks also sold dollars to buy local bonds.

Last week, the central bank’s moral suasion prevented further decline even as the monetary authority signalled a change in its intervention policy.

Officials from the central bank were not available for comments.

Central Bank Governor Indrajit Coomaraswamy said last week that defending the rupee with foreign exchange reserves “doesn’t seem sensible” as it has always been followed by a sharp depreciation in the currency.

The spot rupee was also hardly traded, dealers said.