Rupee tad weaker on importer dollar demand

Saturday, 14 June 2014 00:48 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee edged down from a near a one-year high on Friday as importer dollar demand outpaced greenback sales by banks and exporters while state banks bought dollars to prevent volatility, dealers said. The rupee ended at 130.25/28 per dollar, little changed from Wednesday’s close of 130.25/27, which was its highest since 28 June 2013. Both the forex and stock markets were closed on Thursday for a public holiday. “There was late importer dollar demand,” said a currency dealer asking not to be named. The two State banks, through which the Central Bank intervenes to direct the market, bought dollars at Rs. 130.25, as the Central Bank is allowing a gradual appreciation in the local currency to prevent shocks, dealers said. Dealers said exporter dollar sales picked up on expectations that the rupee would strengthen further. The Central Bank bought dollars at Rs. 130.35 on 30 May and started lowering its buying rate since then, allowing a gradual appreciation. Central Bank Governor Ajith Nivard Cabraal told Reuters last 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. He had said earlier that the Central Bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The Central Bank has absorbed over $ 400 million as of 27 May to prevent a sharp gain in the rupee. Dealers said the Central Bank’s intervention has prevented gains in the currency and they expect the local currency to face upward pressure until credit growth and imports pick up.