Rupee ends near record-low on importer dollar demand

Tuesday, 22 September 2015 01:25 - - {{hitsCtrl.values.hits}}

Reuters: The rupee fell 0.21% on Monday, not far from a record low of 140.98 reached last week, as importer dollar demand outpaced greenback conversions from exporters, dealers said.

The spot rupee ended at 140.85/90 per dollar, weaker from Friday’s close of 140.55/65. It has fallen 4.3% since the central bank effectively floated it on 4 September.

“Exporters are holding back their dollars as they expect some more depreciation in the currency,” said a currency dealer asking not to be named.

The rupee hit an all-time low of 140.98 on 17 September before recovering as a State-run bank, through which the Central Bank usually directs the market, sold dollars to limit the fall. Currency dealers said exporters also later sold dollars.

The market expects the currency to fall further in the short-term if the Central Bank fails to tighten interest rates or the country does not see strong inflows soon, some dealers said.

The rupee float has won a thumbs-up from rating agencies and economists, but more reforms will be needed to support the currency and conserve the Central Bank’s modest reserves.

In a bid to curb dollar outflows on vehicle purchases, the Central Bank on Tuesday imposed a 70% limit on loans and advances for vehicles, a move seen aimed at easing demand for credit and stemming dollar outflows.