Rupee edges up on bank dollar selling, low importer demand

Reuters: The rupee ended slightly firmer on Thursday as dollar selling by a private bank surpassed demand for the greenback from importers, dealers said.

The two State-run banks through which the Central Bank directs the market, were not seen selling dollars, but a local private bank sold the US currency, the dealers said.

The rupee ended at 140.45/50 per dollar compared with Wednesday’s close of 140.55/65.

“The rupee is firmer on bank dollar sales, but it is not clear whether it was due to exporter conversions,” said a currency dealer asking not to be named.

Some dealers also said dollar demand from importers is reducing ahead of the Government’s Budget in November and some new measures to discourage unnecessary imports.

Last week, the Government imposed a 100% margin on letters of credit for motor vehicles to discourage unnecessary imports, in a move to prevent dollar outflows and further weakening of the rupee currency. 

The Government had also changed the method to calculate Customs duties on imported vehicles. The Customs Director General will now determine customs duties based on the prices furnished by the vehicle manufacturers and not on the actual transacted free-on-board value of the vehicle.

The Vehicle Importers’ Association said on Thursday the new method will increase prices of imported vehicles.

The rupee hit a record low of 141.40 per dollar on 28 September, but has recovered over the past few days after a State-run bank sold dollars.