Rupee ends weaker on late importer dollar demand

Reuters: The rupee ended weaker on Monday as late importer dollar demand outpaced dollar selling by banks, dealers said.

The rupee closed at 140.40/45 per dollar compared with Friday’s close of 140.30/40.

“There was importer demand in the latter part of the day,” said a currency dealer asking not to be named.

But dealers said importer dollar demand has reduced following Government measures to discourage vehicle imports.

Vehicle imports will drop by at least 90% after the Government changes the way it calculates the value of certain motor vehicles, officials said on Friday. The Government imposed a 100% margin on letters of credit for motor vehicles to discourage unnecessary imports, in a move to prevent dollar outflows and further weakening of the rupee currency. Some dealers said dollar demand from importers is reducing ahead of the Government’s Budget in November and some new measures to discourage unnecessary imports.

The rupee hit a record low of 141.40 per dollar on 28 September, but has recovered over the past few days due to bank dollar sales which followed dollar selling by a State-run bank.