Saturday, 17 May 2014 00:32
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Reuters: The rupee ended steady on Friday as late importer dollar demand offset the greenback sales from remittances and inflows from stock-related transactions, with dealers expecting the currency to rise due to steady inflows.
The rupee ended at 130.37/40 per dollar, little changed from Tuesday’s close of 130.37/42. Both the currency and the stock markets were closed on Wednesday and Thursday for public holidays.
Dealers said the rupee strengthened to 130.33/35 in early trade before two state banks, through which the central bank directs the market, started buying dollars at Rs. 130.35.
“There was late importer dollar demand,” said a currency dealer.
Central Bank Governor Ajith Nivard Cabraal told Reuters on 9 May that the Central Bank has been “giving effect to the present trend in a gradual manner”.
Steady inflows from remittances and exporter conversions amid lack of importer dollar demand earlier led to the rupee’s appreciation, dealers said.
They expect the rupee to face upward pressure until credit growth and imports reverse their trends.
Despite a multi-year low interest rate regime, data showed private sector credit grew 4.4% in February from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2% on year.
Dealers said lack of credit growth and a contraction in imports could hit the economy unless the government props up expansion through infrastructure funding.
The Central Bank, in its monetary policy statement last month, however, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic growth.
The currency has hovered between 130.55 and 130.70 since 3 March through 8 May, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.
