Rupee falls on importer dollar demand, foreign bond sales

Wednesday, 15 October 2014 01:16 - - {{hitsCtrl.values.hits}}

Reuters: The rupee fell on Tuesday due to importer dollar demand in late trade and as foreign investors sold Government securities. The local currency is under downward pressure due to continued foreign selling in Government securities, dealers said. The spot currency ended at 130.65/70 per dollar compared with Monday’s close of 130.50/60. Dealers said the spot, which was supported by the Central Bank at 130.55 in early trade, fell due to late dollar demand. Three-day forwards or spot next, which was actively traded in the absence of spot trade in the past few days, ended at 130.68/72 per dollar compared with Monday’s close of 130.55/80, dealers said. The Central Bank in the last week of September limited the spot range to between 130.40 and 130.50, to prevent any sharp falls amid heavy selling in stocks and a pullback by foreign investors from Government securities. Currency dealers expect the rupee to weaken due to sustained selling by foreign investors in Government securities, which are already at multi-year lows, rising imports in a low interest-rate environment, and strengthening of the dollar globally. However, Central Bank Governor Ajith Nivard Cabraal said at a Reuters Global Market Forum on Monday that “there would be a greater tendency for the rupee to appreciate gently in light of the improvements in the external account”. Overseas investors sold a net Rs. 4.23 billion ($32.4 million) in Government securities in the week ended 7 October, after selling Rs. 16.9 billion in the previous week, data from the Central Bank showed.

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