Rupee flat on exporter dollar sales

Thursday, 1 May 2014 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended flat on Wednesday as exporter dollar sales in late trade outpaced early importer demand for the greenback. However, dealers said they expect the currency to remain stable in the near term as private sector credit remained sluggish. The spot rupee, which fell to as much as 130.64 per dollar during the day, ended flat at 130.61/63. “Rupee ended flat on exporter dollar sales,” said a currency dealer. Lower credit demand from the private sector, even though key interest rates have been at multi-year lows since January, has surprised dealers. At an auction on Tuesday, the Central Bank rejected all bids for the benchmark 91-day Treasury bills with yields already at their lowest since January 2007, data showed. Last week, the Central Bank kept policy rates steady at multi-year lows. Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the Central Bank showed. That compared with a growth of 5.2% in January this year and 13.3% in February 2013. The Central Bank, in its monetary policy statement last week, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion. Dealers expect the rupee to trade in a 130.60-130.70 range in the near future until credit growth picks up. The currency has been hovering between 130.55 and 130.70 since 3 March, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.