Rupee hits 5-week closing low on importer dollar demand

Thursday, 23 January 2014 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee closed at its five-week low on Wednesday due to importer dollar demand despite dollar sales by a State bank, dealers said. The spot rupee closed at 130.84/88 per dollar, its lowest since 13 December and weaker than Tuesday’s close of 130.75/80. A dealer said banks traded rupee forwards instead of spot in early trades as one of the two state banks, through which the central bank usually directs the market, sold dollars at 130.85, weaker than its selling rate of 130.75 on Tuesday. Dealers expect the rupee to fall in the absence of any intervention by the Central Bank after it said on Monday that inflows of $1 billion from a recent sovereign bond sale would be kept in reserves, contrary to market expectations. Spot next or the three-day forward traded at 130.95 during the day against Tuesday’s close of 130.85/93, before dealers turning to spot as exporter dollar sales helped dollar liquidity, traders said. Dealers said sentiment might be hurt as they expected strong reserves to help the Central Bank defend the currency from depreciating further. The Central Bank had said on 2 January it expected the rupee to strengthen in the medium term and any direct intervention in the foreign exchange market would be minimum. The rupee has gained about 3.4% since it hit a record low of 135.20 on 28 August. It lost 2.5% in 2013.