Rupee falls on importer dollar demand

Reuters - The rupee ended weaker on Friday as importer dollar demand surpassed sales of the U.S. currency by banks, dealers said.

The spot rupee ended at 153.33/38 per dollar, compared with Thursday’s close of 153.20/30.

“We have seen state banks buying dollars probably to pay oil bills as we have seen the demand from CPC (Ceylon Petroleum Corp) with persistent oil demand for thermal power generation due to drought,” a currency dealer said, requesting anonymity.

Hydro-electricity generation has dropped due to a prolonged drought and the island nation has had to rely on thermal power, which requires imported diesel that is usually paid for in dollars.

Dealers said the rupee had not depreciated as much as they had originally expected, and that anticipated dollar inflows could help stabilise the rupee.

The rupee has been under pressure since January after the central bank stopped defending the currency and started buying dollars to build up its depleted foreign currency reserves.