Rupee firmer on exporter dollar sales

Reuters: The rupee rose for the first time in a week on Wednesday as exporter dollar sales surpassed the demand for the US currency from banks to facilitate continuous exit of foreign investors from government securities, dealers said.

Rupee forwards were active, with two-week forwards ending at 151.20/25 per dollar, compared with Tuesday’s close of 151.22/32.

“Exporter conversions came in to the market at the latter part of the day,” said a currency dealers asking not to be named.

The Central Bank kept its key rates steady on Tuesday for a sixth straight month, but flagged possible “corrective measures” in the months ahead in a sign further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.

The rupee has weakened 0.6% so far this year and has been under pressure due to rising imports and net selling of government securities by foreign investors, while the central bank said defending the currency with foreign exchange reserves did not “seem sensible”.

Foreign investors net sold Rs. 26.6 billion ($ 177.10 million) worth of government securities in the four weeks to 1 February, according to the latest Central Bank data.