Rupee trades steady on state bank dollar buying

Thursday, 11 August 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee traded steady on Wednesday as exporter dollar sales were offset by purchases of the U.S. currency by state-run banks, dealers said.

The spot rupee was trading at 145.60/63 per dollar at 0653 GMT, hardly changed from Tuesday’s close of 145.60/65.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

“There was exporter (dollar) selling by local banks but the two state banks are buying at 145.60. It may be to cover oil bills or some state demand, but that buying prevented the rupee from appreciating,” a currency dealer said, asking not to be named.

Since a $1.5 billion inflow from a dual-tenure sovereign bond issue, the central bank has largely not intervened in the currency market to defend the rupee. Central Bank officials were not available for comment.

One-week rupee forwards were trading at 145.80/83 per dollar, compared with Tuesday’s close of 145.80/90.

Foreign investors have net bought Rs. 63.7 billion ($437.50 million) worth of government securities from 29 April through 3 Aug., Central Bank data showed.

The central bank on 28 July raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

The rupee gained last week as foreign investors sold dollars to buy local shares, expecting better profits from corporates on hopes that a recent rate increase by the country’s central bank would help improve the island nation’s macro-economic outlook.

Meanwhile, shares were trading firmer, with the benchmark Colombo stock index up 0.54% at 6,545.36 at 0658 GMT. Turnover stood at Rs. 527.5 million ($3.62 million).

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