Rupee edges down on importer dollar demand

Reuters:  The rupee ended marginally weaker on Wednesday on importer dollar demand, but its decline was limited as banks sold the greenback to facilitate buying of local government securities by offshore investors, dealers said.

Downward pressure on the local currency would likely ease on expected fund inflows after the island nation’s loan deal with the International Monetary Fund and on a plan to raise $1.5 billion by selling a 10-year sovereign bond within the next few days, dealers said.

The spot rupee reference rate was at 145.75, the dealers said.

The banking regulator had fixed the spot trading rate at 143.90 per dollar until 2 May, dealers said. Officials of the Central Bank were not available to comment on whether it had intervened in the forex market.

“Rupee ended weaker on demand (for dollars) but the fall would have been much greater if not for the banks’ (dollar) sales,” a currency dealer said, asking not to be named. Trading in the spot currency has been intermittent since 27 January and on Wednesday the spot was barely bid, but some movement in short-term dollar/rupee forwards indicated the rupee was weaker. The spot next dollar/rupee forwards ended at 146.25/30 per dollar, compared with Tuesday’s close of 146.20/25 per dollar.

The spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following the conventional spot settlement and was five days ahead for Wednesday’s trade.