Rupee posts marginal gains on remittances

Saturday, 3 September 2016 00:44 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended marginally higher on Friday as inward remittances surpassed importer dollar demand, dealers said.

The spot rupee ended at 145.48/53 per dollar, compared with Thursday’s close of 145.50/57, while one-week rupee forwards SLKR ended at 145.65/73, compared with the previous close of 145.65/70.

“Today there were some inward remittances,” a currency dealer said, asking not to be named.

After leaving the key policy rates steady, Central Bank Governor Indrajith Coomaraswamy said on Tuesday that the currency was not under upward pressure as capital inflows had not been of sufficient magnitude to exert such pressure.

The Central Bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July. 

Dealers have said the rupee could appreciate if the Central Bank does not buy the U.S. dollar from the market since capital inflows into government securities have begun, and also due to $1.5 billion sovereign bond inflows.

Dealers also said the Central Bank was not seen intervening in the market to defend the currency. Central Bank officials were not available for comment.

The spot rupee is usually managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

The Central Bank absorbed a net $600 million from the market since the International Monetary Fund (IMF) approved a $1.5 billion, three-year loan in June, Coomaraswamy said.

Net foreign inflows into Government securities jumped more than 32 percent to 304.1 billion rupees ($2.09 billion) through 31 August, according to the latest Central Bank data, since the IMF loan approval.