Thursday, 12 February 2015 00:00
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Reuters: The rupee ended steady on Wednesday in dull trade as the Central Bank prevented any fall amid importer dollar demand and lack of dollar conversion by exporters, dealers said.
The spot currency ended steady at 132.80/133.00 per dollar. On Friday, the Central Bank lowered the spot rate to 132.80 from 132.60 amid depreciation pressure.
Finance Minister Ravi Karunanayake on Monday said the rupee would hold steady at current levels and “there won’t be any devaluation at all.”
“There are no dollar sellers in the market,” a currency dealer said on condition of anonymity. “The market is not trading at all because of the Central Bank’s restrictions.”
Some dealers expect forwards premiums to go up after the Central Bank allowed yields in t-bills to rise between five to eight basis points on Wednesday.
Actively traded six-month forwards traded at 136.15/20 per dollar, while most of the other forwards ceased trading for the third straight session after the central bank narrowed the per day premium to two cents on Monday from Friday’s five cents, dealers said.
Two-month forwards were active early, but the market stopped dealing in them after they did not trade beyond 134.05, dealers said. The forwards closed on Monday at 134.05/10.
Some dealers said exporters might convert dollars, which might help ease the pressure if the Central Bank held the rupee at these levels for the next few days.
Officials from the central bank were not immediately available for comment.
The rupee is under pressure due to higher imports and rising private sector credit in a lower interest-rate regime.
Dealers said policy uncertainty weighed on the currency as the Government had sent mixed signals on investment, discouraging exporter dollar sales amid continued importer demand. They expect the pressure on the rupee to ease with some equity-related inflows.
