Rupee up to near 1-year high on inward remittances

Tuesday, 17 June 2014 01:57 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee edged up on Monday to its highest level in nearly one year on strong inward remittances, while a State bank lowered its dollar-buying rate, dealers said. The rupee, which traded at 130.23/25 per dollar during the day, closed at 130.24/25, its highest close since 26 June 2013, and firmer than Friday’s close of 130.25/28. “There were heavy inflows from remittances,” a currency dealer said on condition of anonymity. One of the two State banks, through which the Central Bank directs the market, lowered its dollar-buying rate by two cents to Rs. 130.23, dealers said. “There is no new direction for state banks. The dollar is anyway under appreciation pressure. If there are any excess dollars after state banks’ import demand, we will buy them,” a Central Bank official said. The Central Bank bought dollars at Rs. 130.35 on 30 May and started lowering its buying rate since then, allowing a gradual appreciation in the rupee. Central Bank Governor Ajith Nivard Cabraal told Reuters on 6 June that the rupee was facing some appreciation pressure and the bank was allowing the trend on a gradual basis to let all stakeholders adjust to the changes. He had said earlier that the Central Bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The Central Bank has absorbed over $400 million as of 27 May to prevent a sharp gain in the rupee. Dealers said the Central Bank’s intervention has prevented gains in the currency and they expect the local currency to face upward pressure until credit growth and imports pick up.