Rupee 2-month forwards close higher on dollar inflows

Reuters: Rupee two-month forwards closed slightly firmer on Thursday due to dollar inflows, dealers said, but the market expected the currency to be under pressure due to persistent demand for the greenback from importers.

Actively-traded two-month forwards ended at 135.50/65 per dollar, firmer from Wednesday’s close of 135.65/75.

“There were inflows into both local and foreign banks,” a currency dealer said on condition of anonymity.

One-month forwards closed steady at 134.70/90 per dollar.

Dealers said the central bank used moral suasion to defend the rupee forwards at preset levels.

Central Bank officials were not available for comment.

The Central Bank on Wednesday allowed the spot to appreciate 10 cents to 133.40 from Tuesday’s level of 133.50.

Dealers said the domestic currency still faced pressure from rising imports and growth in credit.

They said the spot rupee did not trade on the day as the banking regulator used moral suasion to prevent deals below 133.40.

Since 30 April, the central bank has intervened three times to allow the spot rupee to fall 60 cents or by 0.45%, including a 20-cent cut on Tuesday and a 30-cent reduction on 6 May. The spot had been held firm at 132.90 since February until 30 April.