Rupee firmer on exporter dollar sales; CB move seen curbing volatility

Wednesday, 2 July 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee rose slightly on Tuesday as exporter dollar sales outpaced importer demand for the greenback, and dealers said they expected less volatility in the exchange rate after the Central Bank allowed banks to increase their net opening positions. The rupee ended at 130.27/33 per dollar, slightly firmer from Monday’s close of 130.30/33. The Central Bank has allowed banks to increase their net opening positions (NOP) in dollars with effect from Tuesday, dealers said. “That will greatly help to reduce volatility and also help banks’ ability to deal with large dollar transactions,” a currency dealer said on condition of anonymity. Four dealers said the Central Bank had raised the NOP with effect from Tuesday. Central bank officials were not available for comment. Dealers see the currency trading in a range of 130.40 to 130.50 in the near future due to expected importer dollar demand, but expect it to bounce back on inflows. Some dealers expect the rupee to face downward pressure due to continued imports and the fallout from the Government Spokesman saying the country had imported Iranian crude via third parties. Currency dealers said it was too early to speculate on the implications of the country breaching US sanctions. However, it was a relief that nothing had happened so far, they added.

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