Rupee forwards end weaker on importer dollar demand

Reuters: Rupee forwards ended weaker on Thursday, pressured by importer demand for the greenback, despite a 50-basis-point rate hike by the Central Bank last week.

The Central Bank unexpectedly raised its key policy interest rates by 50 basis points on Friday from a record low, to prevent demand-driven inflationary pressure.

One-week rupee forwards, which act as a proxy for the spot currency, ended at 144.80/85 per dollar, 0.1 % down from Wednesday’s close of 144.65/70.

“There was strong dollar demand from importers. We have seen some selling. But that is not sufficient to meet the demand,” said a currency dealer, asking not to be named.

The rupee will be under pressure with seasonal import demand picking up ahead of the local New Year season starting in April, another dealer said. Foreign outflows from the government securities also weighed on the currency.

Foreign investors sold Rs. 10.1 billion ($69.96 million) worth of government securities between 10-17 February, data from the Central Bank showed, taking the total offloaded since 30 December to Rs. 32.47 billion. Commercial banks parked Rs. 33.220 billion ($231.42 million) of surplus liquidity on Thursday, using the Central Bank’s deposit facility at 6.50 %, official data showed.