Rupee steady on Central Bank intervention

Tuesday, 9 July 2013 00:47 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended flat at 130.60 per dollar on Monday at its near eight-month low as the Central Bank asked banks not to buy dollars beyond 130.60 and sold dollars to curb depreciation pressure amid importer demand for the greenback. Currency dealers said the Central Bank’s decision forced banks to shift to forward buying at higher premiums with the local currency remaining under pressure on concerns of further weakening due to fears over foreign outflows. Currency dealers said the rupee’s spot-next traded at a high of 130.95 per dollar during the day before closing at 130.85/95. An official at Central Bank’s International Operations Departments told Reuters that the bank had intervened at Rs. 130.60 a dollar, though only in thin volume. Swarna Gunaratne, Director at the Central Bank’s Economic Research Department, said the Central Bank had intervened in the market on Friday, selling $ 3 million to stabilise the rupee. The Central Bank’s latest data showed foreign investors have sold a net Rs. 105 million ($ 804,000) in Government securities in the week ended on 3 July, but held back individual data on foreign holding in T-bills and T-bonds. Foreign investors have been selling longer tenure T-bonds and some shifting to short tenure T-bonds since early last month, the Central Bank’s data has showed. The rupee fell 3.12% in June as foreign investors pulled out of Treasury bonds due to a rise in US treasury yields on concerns the Federal Reserve would soon start trimming its stimulus program.