Rupee ends firmer as dollar sales surpass importer demand

Reuters: The rupee ended marginally higher on Monday, helped by sale of dollars by exporters and a lack of demand from importers for the greenback, dealers said.

The spot rupee ended at 145.45/50 per dollar, slightly firmer from Friday’s close of 145.48/53, while one-week rupee forwards were at 145.60/65, compared with the previous close of 145.65/73.

“Rupee ended firmer due to exporter (dollar) conversions and lack of importer demand for dollar,” a currency dealer said, requesting for anonymity.

“The seasonal (importer) demand might pick up from middle of the next month. This is a dull season.” After leaving the key policy rates steady, central bank Governor Indrajith Coomaraswamy said last week that the currency was not under upward pressure as capital inflows had not been of sufficient magnitude to exert such pressure.

The Central Bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $ 1.5 billion in July.

Dealers have said the rupee could appreciate if the Central Bank does not buy the US dollar from the market since capital inflows into government securities have begun, and also due to $ 1.5 billion sovereign bond inflows. Dealers also said the central bank was not seen intervening in the market to defend the currency. Central bank officials were not available for comment.

The spot rupee is usually managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

The Central Bank absorbed a net $ 600 million from the market since the International Monetary Fund (IMF) approved a $ 1.5 billion, three-year loan in June, Coomaraswamy said.

Net foreign inflows into government securities jumped more than 32% to Rs. 304.1 billion ($ 2.09 billion) through 31 August, according to the latest Central Bank data, since the IMF loan approval.