Rupee ends steady for second day on State bank dollar selling

Reuters:  The rupee ended steady on Wednesday as a State-run bank sold dollars to offset importer demand for the greenback.

The rupee ended at 141.25/30 per dollar, unchanged from Tuesday’s close.

Dollar selling by one of two State-run banks through which the Central Bank directs the market, kept the rupee steady after it touched a record low on Monday.

Dealers said a foreign bank also sold dollars during the latter half of the day and that allowed the State-owned bank to stay out of the market. The spot currency fell 0.3% to touch a record low of 141.40 on Monday, surpassing its previous all-time low of 141.00 hit on 22 September. “If not for the bank dollar selling, importer demand would have weighed on the currency,” a dealer said on condition of anonymity. Dealers said it was not clear if the State-run bank was selling dollars on its own or on behalf of the central bank.

Central Bank Governor Arjuna Mahendran said on Monday the rupee is “fairly valued” and expected it to stabilise only after a rate increase by the US Federal Reserve, likely by year-end.

The rupee has fallen 4.7% since the Central Bank effectively floated it on 4 September.