Rupee hits record low; CB expects stability soon

Thursday, 29 August 2013 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee hit an all-time low on Wednesday amid panic buying by importers, dealers said, but the Central Bank Governor said the moves were exaggerated by thin volumes and insisted the currency would stabilise soon. “There have been one or two very, very small trades which is an aberration. It will stabilise during the course of the day,” Governor Ajith Nivard Cabraal told Reuters.The rupee spot next or one-day forward, which was active in the market in the absence of spot trade, hit a record low of 135.20 per dollar before ending at 133.70/134.00, weaker than Tuesday’s close of 132.80/90, dealers said. Spot rupee was quoted at 134.00 per dollar in early trade, Thomson Reuters data showed. Currency dealers said a State bank, through which the Central Bank usually directs the market, sold one-day rupee forwards at 133.70, helping the currency to recover to 133.50/70 per dollar. The rupee has been falling since early July as foreign investors pull out of Sri Lanka’s Treasury bonds due to a rise in US Treasury yields on expectations the Federal Reserve will soon begin to taper its massive bond buying program. The rupee has fallen nearly 6% since 7 June and nearly 5% so far this year, after depreciating by around 10% in 2012.