Rupee ends up on bank dollar sales, CB spot rate

Reuters: The rupee ended firmer on Thursday as exporter dollar sales by a local bank and downward adjustment of the currency by the central bank were outpaced by importer demand for the US currency, dealers said.

The spot rupee ended at 145.50/52 per dollar, compared with Wednesday’s close of 145.58/62.

“There was dollar selling by a local bank and then the central bank brought down the rupee preference rate by 10 cents to 145.50 per dollar,” a currency dealer said, asking not to be named.

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

Since a $1.5 billion inflow from a dual-tenure sovereign bond issue, the Central Bank has largely not intervened in the currency market to defend the rupee. Central Bank officials were not available for comment.

One-week rupee forwards ended at 145.65/72 per dollar, compared with Wednesday’s close of 145.75/80.

Foreign investors bought a net Rs. 63.7 billion ($437.5 million) worth of Government securities from 29 April through 3 August, Central Bank data showed.

The Central Bank on 28 July 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 rupee gained last week as foreign investors sold dollars to buy local shares, expecting better profits from corporates on hopes that a recent rate increase by the country’s Central Bank would help improve the island nation’s macro-economic outlook.