Rupee forwards end little changed; spot not traded

Reuters:  Rupee forwards ended little changed on Tuesday, with some importer dollar demand emerging after a sharp rise in the local currency over the last few days following conversions by foreign investors and exporters, dealers said.

The spot rupee, which was traded actively for four straight sessions through Monday, was not traded on Tuesday, they said. On Monday, it had closed at 144.85/95 per dollar.

Dollar/rupee forwards, known as spot next, ended at 144.90/145.10 per dollar, compared with Monday’s close of 144.90/145.00.

“The importer dollar demand was there today. Natural demand has come in as the rupee appreciated during the last few days,” a currency dealer said, asking not be named.

“Heavy moral suasion prevented spot and spot next trading and it was the one-week forwards which were active. The central bank did not allow spot and spot next trade higher.”

One-week forwards ended at 145.30/40 per dollar, lower than Monday’s close of 144.95/145.10.

Rupee forwards have been appreciating due to inflows from foreign investments into government securities, another currency dealer said.

Foreign investors bought a net Rs. 8.47 billion ($58.53 million) worth of government bonds in the week ended 8 June, latest central bank data showed.

Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is three days ahead for Tuesday’s trade.

Dealers said the central bank was intervening in the market to keep the rupee steady.

Central Bank officials were not available for comment.

Dealers say they expect the rupee to strengthen further after the IMF approved a three-year, $1.5 billion loan to support the country’s economic reform agenda.