Rupee ends firmer on dollar sales by banks

Friday, 8 July 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended firmer in one-week forwards on Thursday as dollar sales by banks surpassed importer demand for the greenback, dealers said.

The spot rupee is tightly managed by the Central Bank and market participants use the forward market levels for guidance on the currency.

Many dealers said the Central Bank did not intervene for the third straight session since the appointment of the new Central Bank Governor.

The rupee in one-week forwards, which have been acting as a proxy for the spot rupee, ended at 146.15/30 per dollar, stronger than Tuesday’s close of 147.20/30.

Sri Lankan markets were closed on Wednesday for a public holiday.

“We have seen some banks selling dollars probably foreign investors buying (rupee) bonds,” said a currency dealer, asking not to be named.

Speaking in his first meeting with the media, after market hours on Tuesday, the new Central Bank Governor, Indrajit Coomaraswamy, said the monetary authority would manage the exchange rate flexibly and not have too much volatility.

He said capping the spot rate was “something that has been kept constantly under review if and when there is a requirement to move on the exchange rate.”

Central Bank Deputy Governor Nandalal Weerasinghe said on Tuesday the level of Central Bank intervention had come down drastically and that it had been absorbing dollars instead of selling. Both spot rupee and spot-next were not quoted, dealers said.