Rupee gains after CB resumes OMOs

Saturday, 4 October 2014 01:20 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended stronger against the dollar on Friday after the Central Bank resumed open market operations (OMOs) in the previous session. The spot currency ended at 130.30/35 per dollar compared with Thursday’s close of 130.30/50. It hit 130.80 on Tuesday. The Central Bank suspended OMOs along with its last month monetary policy announcement on 23 September to push banks to cut lending rates and boost private sector credit. “The Central Bank’s action has given some stability to the market. It eradicated the ambiguity created following the monetary policy statement,” said a currency dealer. Two other dealers said the downward pressure seems to have eased after the Central Bank started OMOs. The spot rupee was not quoted in early trade on Thursday for a second straight session after the Central Bank limited the spot currency range to between 130.40 and 130.50, to prevent any sharp fall amid heavy equity selling and pullback by foreign investors from government securities. The rupee had come under pressure after foreign funds sold stocks worth Rs. 4.4 billion($ 33.7 million) in the three sessions through Tuesday. Central Bank data showed foreign investors had sold a net Rs. 16.9 billion ($ 129.7 million) worth of government securities in the week ended 1 October. Foreigners net sold 5.07 billion in government securities for the week ended 24 September. Currency dealers expect the rupee to weaken further on the back of sustained selling by foreign investors in government securities, which are already at multi-year lows, and rising imports in a low interest rate environment.