Rupee rebounds, ends up on exporter dollar sales

Thursday, 22 May 2014 02:03 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended slightly firmer on Wednesday, recovering from early losses as late exporter dollar sales outpaced early importer demand amid a State bank’s dollar-buying. Dealers expect the currency to rise further, if the Central Bank does not intervene heavily, fed by steady inflows in the absence of strong demand for imports and credit. The rupee ended at 130.34/36 per dollar, slightly stronger from Tuesday’s close of 130.35/40. One of the two State banks, through which the Central Bank directs the market, bought dollars at 130.35 and 130.36, dealers said. “There was import demand in the morning. But we saw some (dollar) conversions in the evening, which helped the currency to strengthen,” said a currency dealer. The Central Bank has been preventing the rupee’s appreciation over the last few weeks due to steady inflows amid slack demand for private sector credit and imports. Despite a multi-year low interest rate regime, data showed private sector credit grew at a four-year low of 4.3% in March from a year earlier, while imports in February fell 6.2% on the year. While maintaining the policy rate for the fourth straight month on Tuesday, the Central Bank said it expected to introduce a new guarantee scheme for gold loans to boost credit growth that hit a four-year low in March. Dealers expect the rupee to face upward pressure until credit growth and imports reverse the trend. On Monday, Central Bank Governor Ajith Nivard Cabraal said private sector credit growth would pick up to around 15% by end-2014 and continue to improve through 2016.

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