Ravi K tips sharp rise in rupee in two weeks

Wednesday, 24 June 2015 00:19 - - {{hitsCtrl.values.hits}}

Wears soothsayer’s hat and informs Parliament rupee to rise to 130 per dollar in next 2 weeks
Traders say rupee unlikely to appreciate so quickly
One dealer sees strong demand for dollars

Reuters: Finance Minister Ravi Karuna-nayake said on Tuesday the rupee was set to climb to a two-year high of 130 per dollar from current levels due to ample dollar inflows.

“Today, the dollar is at Rs. 133.90. We will bring this to Rs. 130 within the next two weeks. There are ample dollars coming into the country,” Karunanayake told Parliament in response to a question raised by the Opposition.

The Opposition has criticised Karunanayake for mismanaging the economy since he came to power after an 8 January election.

Currency dealers said the Government may have knowledge about dollar inflows but said it was unlikely the rupee would appreciate so much within such a short period of time.

If the rupee climbs to 130 per dollar, it would have appreciated 3% to a two-year high.

“It is possible if there are inflows and if those inflows go through the market. He Finance Minister) may have information what we don’t have. So he may be aware of the inflows,” said a currency dealer asking not to be named.

The rupee’s value is largely decided by the Central Bank as it can direct State banks to buy or sell dollars.

However, another dealer said allowing a 3% appreciation is not possible over such a short period.

“I am not sure if the Finance Minister is being practical. I do not see rupee appreciation given a strengthening dollar, heavy demand for dollars and rising demand for imports.”

The rupee traded steady at 133.90 to the dollar on Tuesday after hitting a record low of 134.20 last Thursday.