Rupee ends near 1-year high; State banks curb volatility
Tuesday, 10 June 2014 00:58
Reuters: The rupee ended near a one-year high on Monday as exporters and dollar sales by banks outpaced importer demand, while two State banks bought the greenback to prevent any sharp volatility in the local currency.
The rupee ended at 130.26/28 per dollar, its highest since 28 June 2013 and slightly firmer from Friday’s close of 130.26/30.
Dealers said the two State banks, through which the Central Bank directs the market, bought dollars at 130.26 rupees per dollar as the Central Bank allowed gradual appreciation in the currency to prevent shocks.
The Central Bank bought the currency at 130.35 through the two banks on 30 May and started lowering its buying rate since last week, allowing a gradual appreciation.
Central Bank Governor Ajith Nivard Cabraal told Reuters on Friday that the rupee was facing some appreciation pressure and the bank was allowing the trend on a gradual basis to let all stakeholders adjust to the changes, without any shocks.
He had said earlier that the Central Bank would keep intervening in currency market to prevent a rapid rise in the rupee. The Central Bank had absorbed over $ 400 million as of 27 May this year to prevent a sharp gain.
Dealers said the Central Bank intervention has prevented gains in the currency and they expect it to face upward pressure until credit growth and imports pick up.