Rupee forwards end steady; downward pressure persists

Reuters: Rupee forwards ended steady on Thursday as dollar sales by exporters and banks offset importer demand for the greenback, currency dealers said.

The rupee is, however, expected to further depreciate due to rising imports, selling of Government securities by foreign investors and slowing dollar inflows, the dealers said.

One-week rupee forwards, which act as a proxy for spot, ended at 144.43/50 per dollar, hardly changed from Wednesday’s close of 144.42/48.

Rupee forwards have been active since 27 January as there has been little trading in the spot currency, with banks reluctant to trade below the 144.00 level amid moral suasion by the central bank.

Central Bank officials did not respond to calls seeking comment.

“The market is not sure why the Central Bank is defending the currency after floating it. They might be expecting some kind of inflows and the rupee to reverse the falling trend,” said a currency dealer asking not to be named.

“Still the depreciation pressure is there. The Central Bank’s moral suasion prevents the market from trading the rupee freely.”