Rupee snaps eight sessions of gains; importer dollar demand weighs

Tuesday, 12 August 2014 00:41 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended weaker on Monday, snapping a run of eight straight winning sessions and edging off a four-week high hit in early trade on importer demand for dollars, dealers said. Central Bank Governor Ajith Nivard Cabraal told Reuters on Saturday that the rupee would not suffer downward pressure in the foreseeable future thanks to a policy aimed at building foreign reserves and that a gradual gain was expected. The rupee ended at 130.20/23 per dollar, weaker from Friday’s close of 130.17/18. During early trade, it hit 130.16/19, its highest since 21 July. “But it (the fall) is temporary. The rupee will continue to strengthen with the strong inflow (of dollars) from remittances and exporters,” said a currency dealer. “The capacity to borrow is restricted due to high taxation. But we might see import demand picking up after November,” he said, adding that the market expected a big fiscal stimulus in the 2015 budget scheduled in November. “We might see importer demand and credit demand picking up (after November).” The rupee has been on a rising trend since February due to lack of strong demand for imports and private sector credit growth. It has risen 0.5% so far this year despite heavy dollar buying by the Central Bank.

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