Rupee ends higher on exporter dollar sales

Reuters: The rupee ended firmer on Wednesday, helped by exporter dollar sales and inward remittances but importer demand for the greenback from a state bank weighed on the sentiment, dealers said.

Rupee forwards were active, with two-week forwards ending at 152.55/65 per dollar, compared with Tuesday’s close of 152.70/80.

“There was some selling by a foreign bank. We have seen some inward remittances ahead of the festive season and seasonal (importer) demand has largely covered. Besides, the state bank’s demand for dollar was also there,” said a currency dealer, requesting anonymity.

The rupee has been under pressure due to dollar demand to meet increased seasonal imports ahead of the traditional New Year in April, dealers said.

The Central Bank on Monday raised the spot rupee reference rate by 10 cents to 151.70 after the bank raised it by 25 cents on 20 March.

On Friday, the Central Bank raised interest rates for the first time in eight months, saying tighter policy was a precaution against a build-up of inflationary pressures.

Analysts said the rate hike, a move aimed at easing pressure on the rupee, could help stabilise the domestic currency that is hurt by rising imports and outflows due to rupee bond sales by foreign investors.

Foreign investors net bought government securities worth Rs. 70 million ($ 461,285) in the week ended 22 March. They have net sold Rs. 63.2 billion of such instruments so far this year.