Rupee gains on dollar sales by State-run bank

Friday, 18 October 2013 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended firmer on Thursday on dollar sales by a State-run bank, but dealers said the currency could be under downward pressure after the Central Bank cut key policy interest rates to multi-year lows. Dealers said dollar sales by the State-run bank at Rs. 131.10 prompted other banks also to sell the greenback. The spot rupee ended at 131.00/10 per dollar, firmer from Tuesday’s close of 131.16/25. Markets were closed on Wednesday for a holiday. The Central Bank on Tuesday cut key policy interest rates to spur economic growth, just three weeks after the International Monetary Fund advised it to hold rates steady. Currency dealers, however, expect this decision to put the rupee under downward pressure. However, Central Bank Governor Ajith Nivard Cabraal said the rate cut decision was taken after considering the stability in the exchange rate and favourable inflation outlook in the near future. The rupee hit a record low of 135.20 on 28 August, but has managed to stem further losses since then. Against a basket of currencies, the greenback had slipped 0.7% to 79.9 having earlier set a one-month high on the initial relief that a full-blown crisis had been averted. Both currency and stock markets will remain closed on Friday for a holiday and normal trading will resume on Monday.