Rupee hits fresh low on importer dollar demand

Reuters: The rupee touched the lowest level since last week on Wednesday, as importer dollar demand surpassed mild selling of the greenback by exaporters, dealers said.

The spot rupee ended at 158.75/90, weaker from Tuesday’s close of 158.60/75. It hit an intraday low of 158.80, a level it first reached on Friday, surpassing a previous low of 158.50 hit on 16 May.

The currency has declined 3.4% so far this year.

“The importer (dollar) demand was there. Some foreign banks were on the buying side and the rupee ended weaker in the absence of State banks,” a currency dealer said. Dealers said the rupee will be under pressure, with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies.

The pressure on the currency is unwarranted as gross external reserves are at $9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive, the Central Bank has said.

Foreign investors sold Government securities worth a net Rs. 787.24 million  ($4.97 million) in the week ended 30 May, bringing the outflow so far this year to Rs. 17 billion , Central Bank data showed.