Rupee forwards close lower on dollar inflows

Reuters: Rupee forwards ended slightly weaker on Wednesday as importer demand for the greenback and mild dollar inflows put pressure on the rupee despite a 50-basis-point rate hike by the central bank last week.

One-week rupee forwards, which act as a proxy for the spot currency, ended at 144.65/70 per dollar, compared with Tuesday’s close of 144.60/67.

“The demand was there today and exporters are not converting dollars,” a currency dealer said, asking not to be named. “Still the policy uncertainty is there and there is also some speculation over inflows from borrowings.”

The rupee will be under pressure with seasonal import demand picking up ahead of the local New Year season starting in April, another dealer said.

Commercial banks parked Rs. 33.904 billion ($236.51 million) of surplus liquidity on Wednesday, using the central bank’s deposit facility at 6.50%, official data showed.