Rupee recovers from record low on exporter dollar sales

Reuters: The rupee ended firmer on Tuesday, recovering from an all-time low hit in the previous session, as late exporter dollar sales surpassed mild importer demand for the greenback, dealers said.

The spot rupee, which hit an all-time low of 159.80 per dollar in the previous session, ended at 159.50/70 per dollar on Tuesday. The rupee ended firmer compared with Monday’s close of 159.60/90, and declined 3.9% this year.

“Today the market was very quiet. People were very reluctant to trade and there was not much of demand. We saw some dollar sales later in the day,” a currency dealer said.

Dealers said the rupee is under pressure mainly because of the global trend, and the trend is not specific to the rupee alone.

Central Bank Governor Indrajit Coomaraswamy was quoted in Daily FT as saying: “As far as the central bank is concerned, we do not see any cause for the pressure that’s there in the forex market.”

He said the Central Bank would not tolerate any speculation going on in the market.

“In the long run, enlighten the self-interest of those who operate in a forex market. We have a lot of instruments to restrict them... to restrict importers, to restrict exporters,” he said.

“We want to give the market a competitive exchange rate. We don’t want to intervene in the market. We want people to behave responsibly and to run the market in a responsible way.”

Dealers said the rupee will be under pressure, with exporters staying on the sidelines anticipating a fall in the unit, in line with other emerging market currencies.

Dealers expect the rupee to trade in the 163-165 range by the end of the year.

Central Bank officials were not immediately available for comment.

Foreign investors sold government securities worth a net Rs. 2.8 billion ($ 17.60 million) in the week ended 6 June, bringing the outflow so far this year to Rs. 19.9 billion, Central Bank data showed.