Rupee steady; state bank dollar buying offsets inflows

Wednesday, 5 March 2014 00:26 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended steady on Tuesday as dollar buying by the two State banks offset inward remittances and exporter conversions, dealers said. The spot rupee ended at 130.61/65 per dollar, little changed from Monday’s close of 130.60/65. The currency has risen 0.34 percent in the last four sessions, Thomson Reuters data showed. “The market is smooth and we will intervene only when there is high volatility,” an official from the Central Bank told Reuters. The Central Bank on Monday said it bought a significant amount of dollars to keep the currency steady. Dealers said inflows from remittances and exporter conversions helped boost investor sentiment and the two state banks, through which the Central Bank usually directs the market, bought dollars around 130.60 level. “We don’t know if the buying was on behalf of the Central Bank,” a currency dealer said. The market expects downward pressure to continue ahead of festival import demand in April and due to equity outflows. However, the depreciation is expected to be mild as the Central Bank has strong reserves to defend the rupee. Foreign investors have sold a net Rs. 5.43 billion in stocks in 17 straight sessions through Tuesday, but they bought a net Rs. 709 million worth of Government securities in the week ended 26 February. The rupee has gained about 3.5% since it hit a record low of 135.20 on 28 August last year. It lost 2.5% in 2013.