Rupee weaker as state bank raises dollar peg

Reuters: The rupee ended weaker on Wednesday for the first time in four sessions as a state-run bank raised the currency’s peg against the dollar by 5 cents to allow the exchange rate to depreciate to 133.80, dealers said.

Exporters sold some amount of dollars after the move, but there was demand for the greenback from importers, dealers said.

“The import pressure is there and exporters are not selling expecting further depreciation in line with depreciation of other currencies globally,” said a currency dealer, asking not to be named.

One of the two state banks, through which the central bank usually directs the market, started to sell dollars at 133.80, ending three straight sessions when the rupee held steady, they said.

The rupee ended at 133.80/85, weaker from Tuesday’s close of 133.75 per dollar. The state-owned bank raised the currency’s peg against the dollar by 25 cents last Thursday to allow the exchange rate to depreciate to 133.75.

The dollar and emerging market currencies were all under pressure after China pushed the yuan lower again overnight, boosting the appeal of top-rated government bonds.