Rupee rises to over 1-year high; State banks limit gain

Saturday, 12 July 2014 01:59 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended at its highest in more than a year on Friday due to inflows from remittances and exporter dollar sales, while State banks bought dollars at a lowered buying rate to curb any sharp appreciation in the local currency. The rupee closed at 130.20/22 per dollar, its highest close since 26 June 2013 and firmer from Thursday’s close of 130.23/24. “There are inflows and the State banks lowered the buying rate by three cents,” a currency dealer said. The one-month forward premium closed steady at a near three-year low of 10/20 cents, which dealers said was due to expectations of further gains in the currency. Dealers said dollar-buying by State banks checked sharp gains, though forward premiums were coming down with increased forward selling. The Central Bank usually directs the market through the two State banks, but dealers said they were not quite sure if the State banks were buying for the Central Bank. Central Bank officials were not immediately available for comment. Dealers said the fuel import bill, which accounts for around 20% of monthly imports, is also on the decline as the country has been shifting to alternative power sources such as coal and hydro.

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