Rupee rises; CB revises spot ref rate to record low

Reuters: The rupee ended slightly firmer on Wednesday, recovering from losses earlier in the day as dollar selling by foreign banks helped gains despite the central bank revising the spot reference rate by 10 cents to a record low, dealers said.

Rupee forwards were active, with two-week forwards ending at 150.90/151.00 per dollar after trading at 151.10/20 earlier in the session. Two-week forwards closed at 150.95/151.05 on Tuesday.

The spot rupee was quoted around the central bank’s revised reference level of 150.25, dealers said.

“The Central Bank’s spot reference rate revision indicates that the demand pressure is building up. Generally, we see exporters booking forwards in January. But this time we haven’t seen them booking, with the drought and other uncertainties, which could impact their production,” a currency dealer said, asking not to be named. Officials from the central bank were not available for comment.

“The pressure (to depreciate) was there throughout the day. But we have seen some selling by some foreign banks probably to buy (rupee) bonds. That eased the pressure during the latter part of the day,” the currency dealer said.

The dollar, however, drifted lower against a basket of major currencies, giving back a bulk of its overnight gains.

The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, while the Central Bank has said defending the currency was not sensible.

The Central Bank sold $ 458 million worth of development bonds on Thursday and investors said they expected the move to ease the pressure on the rupee.

Foreign investors have net sold Rs. 19.8 billion ($ 132.00 million) worth government securities in the two weeks to 18 January, according to the latest Central Bank data.