Rupee ends firmer as remittances offset importer dollar demand

Reuters: The rupee ended slightly firmer on Friday as inward remittances and dollar sales by exporters surpassed early importer demand for the US currency, a dealer said.

However, expectations that imports would increase weighed on the local currency.

The spot rupee ended at 153.60/70 per dollar, compared with Thursday’s close of 153.63/68.

“Downward pressure was there, but due to remittance inflow and exporter dollar sales the rupee ended firmer. Today, we didn’t see the state bank that has been buying (dollars) in the past few days, and it has also helped the currency to end firmer,” said a currency dealer, requesting anonymity.

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

Dealers said they expected seasonal demand for dollars 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.