Rupee ends down on importer dollar demand

Reuters: The rupee ended weaker on Tuesday as importer dollar demand outpaced greenback sales by exporters and banks, dealers said.

Expectations of a rise in imports also weighed on the local currency, they added.

The spot rupee ended at 153.63/70 per dollar, weaker from Monday’s close of 153.57/63.

The spot rupee resumed trading on June 19 for the first time since 5 May, when the Central Bank fixed its reference rate at 152.50.

“We have seen some demand from state banks to cover oil bills, and there is demand from the construction sector as well,” said a currency dealer, requesting anonymity.

Dealers said they expected seasonal demand for the dollar to pick up from August.

The rupee has been under pressure since early this year after the Central Bank stopped defending the currency at a time when the island nation faces a balance of payments crisis.

The Central Bank is also compelled to buy dollars from the market to meet the reserve target set by the International Monetary Fund (IMF) under a $ 1.5 billion, three-year loan program.