Rupee recovers from 3-week low; seen facing downward pressure

Wednesday, 23 July 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended a tad firmer on Tuesday, recovering from its near three-week low hit in the previous session, as exporter dollar sales offset early import demand, though dealers said the local currency could face some downward pressure during the week due to import bills. The rupee ended at 130.27/29 per dollar, compared with Monday’s close of 130.30/32. Early last week, it hit a more than one-year closing high. “We saw some exporter dollar sales late in the day. But some heavy import bills are expected, probably from oil imports,” a currency dealer said on condition of anonymity. “So, we expect the rupee to be under downward pressure this week.” Dealers, however, said they did not see any impact on the rupee due to $307 million in outflows from government securities a week earlier. Offshore investors sold Rs. 40 billion ($ 307 million) worth of Government securities last week, official data showed on Monday, but the Central Bank said this would not affect the rupee. Dealers said though the $307 million has been shown as outflows, foreign investors have not taken the funds out of the country. A currency dealer at a foreign bank, which usually deals with foreign trading in Government securities, on Monday said the country could also see similar amount of inflows in the near future. He did not elaborate. The Central Bank has said the rupee would have appreciated to around 125 rupees per dollar had it not intervened by absorbing $750 million from the domestic foreign exchange market this year through 14 July. Dealers had been expecting the rupee to appreciate due to lack of strong growth in imports and private sector credit, despite lower interest rates. Yields in Treasury bills edged down further at a weekly auction on Wednesday.

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