Rupee ends firmer; CB buys dollars

Reuters: The rupee ended marginally firmer yesterday, a day after a top Central Bank official warned against market manipulation, a dealer said.

The Central Bank bought dollars from the market on a net basis, Central Bank Senior Deputy Governor Dr. P. Nandalal Weerasinghe told Reuters.

“The Central Bank bought $30 million from the market while we also sold some amount of dollars. But on a net basis, we bought dollars as we see the rupee is gradually stabilising,” Weerasinghe told Reuters.

He said the weighted average value of the currency has appreciated from Thursday’s (3 May) close.

On 2 May, the rupee hit a fresh all-time low of 157.90 per dollar.

The rupee closed at 157.50/90 per dollar yesterday, compared with Thursday’s close of 157.80/158.00.

“There was demand in the morning from importers and some fixed income outflows. We saw the Central Bank selling dollars at 157.65,” a currency dealer said, asking not to be named.

On Thursday, Weerasinghe said the rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency.

It fell 0.9% last week, and 1.5% in April.

The Central Bank said yesterday that it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record $10 billion foreign currency reserves.

The rupee has weakened 2.6% so far this year. It dropped 2.5% last year and 3.9% in 2016.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the Government.

Foreign investors sold Government securities worth a net Rs. 288.6 million ($1.8 million) so far this year through 25 April, Central Bank data showed.