Rupee forwards end weaker; downward pressure persists
Reuters: Rupee forwards ended weaker on Thursday on light importer dollar demand and dealers expect downward pressure on the currency to persist after the central bank in a surprise move on Wednesday cut key monetary policy rates to record lows.
Actively traded two-week forwards ended at 133.90/95 per dollar, down from Wednesday’s close of 133.78/85, while one-week forwards closed steady at 133.60 per dollar amid moral suasion by central bank.
Dealers said one-month forwards finished at 134.15/25 per dollar, compared with the previous close of 134.05/15.
“Unless the central bank boosts the reserves either through inflows or borrowing, it will be difficult to prevent the fall of the rupee,” a currency dealer said on condition of anonymity.
Finance Minister Ravi Karunanayake on Wednesday said there were sufficient funds to defend the currency and a lot of foreign inflows are expected.
Dealers said the Central Bank’s move to reject all bids at a 50-month Treasury Bond yield is to direct the markets on interest rates.
The Central Bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February.
Central bank officials were not immediately available for comment.