Rupee at new 11-month low on importer dollar demand

Tuesday, 20 August 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee hit a fresh 11-month low on Monday due to demand for US dollars from importers as banks switched to one-day currency forwards after an inactive spot market, currency dealers said. The spot rupee ended at 131.85/132.00 per dollar, its lowest since 17 September 2012 and weaker from Friday’s close of 131.65/75. The spot next or one-day forward ended at 132.00/15 per dollar, dealers said. Dealers said they had moved to one-day forwards instead of spot trade after the Central Bank sold one-day forwards at Rs. 131.60 per dollar to selected banks. An official at the Central Bank’s International Operations Department said the bank would intervene if there was excess volatility in the market and declined to comment whether the Central Bank was defending the currency on Monday. The rupee fell around 4% between 7 June and 18 July, after foreign investors started pulling out of Sri Lanka’s Treasury bonds due to a rise in US treasury yields on expectations of a winding down of monetary stimulus by the Federal Reserve. The currency has been steady around 131.60 since then until last week as the Central Bank has not allowed the spot to be traded beyond 131.60.

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