Rupee ends weaker on importer dollar demand

Reuters: The rupee closed slightly weaker on Thursday as dollar demand from importers outweighed selling of the US currency by exporters, dealers said.

Rupee forwards were active, with spot-next forwards closing at 152.98/153.02 per dollar, compared with Wednesday’s close of 152.95/153.05.

One-week forwards ended at 153.25/35, compared with Wednesday’s close of 153.15/25.

“The two state banks were on the (dollar) buying side today,” said a currency dealer, requesting anonymity.

“Nobody wanted to trade spot next above 153.00, fearing moral suasion by the central bank,” said the dealer, adding that the seasonal demand for dollars would start from August.

The rupee has been under pressure after central bank Governor Indrajit Coomaraswamy said the bank would allow gradual depreciation of the currency.

The Central Bank has set a target of $ 1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year.

The spot rupee did not trade on Thursday. The Central Bank fixed the spot reference rate at 152.50 on 5 May.

Foreign investors bought a net Rs. 1.37 billion ($ 8.98 million) worth of government securities in the week ended 7 June. They have sold a net Rs. 39.96 billion worth of government bonds so far this year.