Foreign investor dollar sales boost rupee

Thursday, 4 August 2016 00:24 - - {{hitsCtrl.values.hits}}

Reuters: The rupee edged up on Wednesday as foreign investors sold dollars to buy bonds on hopes of higher returns while some offshore investors bought stocks expecting an improvement in macroeconomic fundamentals after the rate hike, dealers said.

One-week rupee forwards, which have been acting as a proxy for the spot rupee, ended at 146.00/15 per dollar, up from Tuesday’s close of 146.10/15. “The rupee is firmer on some (dollar) selling by foreigners to buy bonds and also we have seen some foreign inflow into the stock market,” said a currency dealer, asking not to be named.

The spot rupee is tightly managed by the central bank, and market participants use the forward market levels for guidance on the currency.

The central bank last week raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

The spot rupee was not traded on Wednesday.

Spot-next, which are rupee forwards settled a day after the spot rupee settlement, were at 145.90/98 per dollar, compared with Tuesday’s close of 145.95/146.05.