Rupee edges up on bank dollar sales

Reuters: The rupee edged up on Wednesday as dollar sales by a private bank offset demand for the greenback from importers, dealers said.

The rupee gained 0.24% to close at 143.90/144.00, rising from Tuesday’s close of 144.25/45.

“The rupee rose as a private bank started selling dollars from 144.20 to 143.95, which prevented the fall,” said a currency dealer, requesting not to be named.

A few dealers said the private bank could have sold dollars on behalf of the Central Bank as it did not allow the rupee to fall below 143.95.

Another dealer said a State-run bank bought most of the dollars when the rupee was sold at 143.95, and then, suddenly stopped buying.

To instil investor confidence, the Central Bank said on Monday it would lift all restrictions on outflows by nationals who send money that’s earned in foreign currencies.

Central Bank Governor Arjuna Mahendran said a steep fall in the rupee has slowed and currency seems to be stabilising at the current level, due to inflows from remittances.

Some analysts expect the rupee to stabilise due to gradual rise in market interest rates. Yields in 91-day t-bills rose by 14 basis points to more than two-month high at a weekly auction on Wednesday, after the central bank increased statutory reserve ratio by 150 basis points with effect from Jan. 16.

Commercial banks parked Rs. 79.4 billion ($551.77 million) of surplus liquidity on Wednesday using the central bank’s deposit facility at 6%, official data showed.