Rupee edges down on importer dollar demand

Wednesday, 11 May 2016 00:00 -     - {{hitsCtrl.values.hits}}

Reuters:  The rupee closed marginally weaker on Tuesday as importer dollar demand outpaced selling of the greenback by banks to facilitate offshore investors’ buying of local government securities, dealers said.

They said they expect the downward pressure on the local currency to ease on expected fund inflows following a loan deal with the International Monetary Fund and after a top finance ministry official said on 1 May the island nation would raise $1.5 billion by selling a 10-year sovereign bond within the next 10 to 12 days.

The spot rupee reference rate stood at 145.70, the dealers said.

The banking regulator had fixed the spot trading rate at 143.90 per dollar until 2 May, they said. Officials of the Central Bank were not available to comment on whether it had intervened in the forex market.

“Demand (for dollars) was there today but due to foreigners’ buying of bonds the pressure (on the rupee) eased,” a currency dealer said, asking not to be named.

Trading in the spot currency has been intermittent since 27 January and on Tuesday the spot was barely bid, but some movement in short-term dollar/rupee forwards indicated the rupee was weaker.

The spot next dollar/rupee forwards ended at 146.20/25 per dollar, compared with Monday’s close of 146.15/20 per dollar.

The spot next, which acts as a proxy for spot currency, indicates the exchange rate for the day following the conventional spot settlement and was three days ahead for Tuesday’s trade.