Rupee falls on importer dollar demand

Reuters: The rupee closed marginally weaker on Friday, as demand from importers for the US currency outpaced dollar conversions by exporters and inward remittances, dealers said.

The spot rupee closed at 153.75/80 per dollar, compared with Thursday’s close of 153.65/75.

“There was remittance inflow today for salaries but the rupee ended a little weaker on importer dollar demand. General import demand was there,” said a currency dealer who declined to be identified.

“We can see some exporters booking forwards due to favourable forward premiums.”

Though the rupee is under pressure, it may not fall as much as the market previously expected, dealers said.

The market expected a 4% fall in the currency for 2017, while it has lost 2.7% so far this year.

However, the currency is expected to face pressure with imports of more low-end vehicles, on which the government has already reduced taxes.

The Government imposed new taxes on high-end vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 Budget presented earlier this month.

Foreign investors were net buyers of equities worth Rs. 18.4 billion ($ 120.4 million) this year as of Friday’s close. They were net buyers of government securities worth Rs. 45.7 billion as of 15 November, official data showed.