Thursday, 26 September 2013 00:37
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Reuters: The rupee ended firmer on Wednesday as the Central Bank asked certain banks not to trade above 132 per dollar, dealers said.
The rupee spot closed at 131.95/132.05, compared with Tuesday’s close of 132.18/22.
“The moral suasion was seen,” said a currency dealer asking not to be named.
Two other dealers confirmed the move.
Central Bank officials authorised to talk to the media were not available for comment. Central Bank Governor Ajith Nivard Cabraal earlier this month said moral suasion is in the Monetary Law Act as well as in almost every country’s central banking law and all central banks are expected to make use of such instruments.
The International Monetary Fund on Wednesday urged the Central Bank to keep interest rates steady and limit its intervention in the rupee exchange rate “to dealing with excessive short term volatility”.
Many dealers expect the rupee to hold steady around the 132 level due to inflows from the National Savings Bank’s $ 750-million five-year bond issue. The currency hit a record low of 135.20 on 28 August, but has managed to stem further losses since then. It has fallen 3.6% this year, after depreciating about 10% in 2012.
The rupee has been falling since early July when foreign investors started pulling out of local bonds as US Treasury yields rose in anticipation of the US Federal Reserve trimming its stimulus.
