Rupee ends up on bank dollar sales

Reuters: The rupee ended firmer on Thursday as banks’ dollar sales surpassed mild importer greenback demand, dealers said.

One-week rupee forwards, which have been acting as a proxy for the spot rupee, ended at 146.10/25 per dollar, slightly firmer from Wednesday’s close of 146.25/40.

The spot rupee is tightly managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.“We saw some (dollar) selling today. Being closer to the month end, we saw some remittances coming in and some foreign banks also sold dollars,” said a currency dealer, asking not to be named.

The rupee is under pressure due to importer dollar demand and dealers said the market has shrugged off speculation of a strong rise in the rupee as the island nation’s heavy debt repayment reduced dollar availability for the Central Bank to defend the currency.

Finance Minister Ravi Karunanayake said earlier this month that the rupee would “obviously appreciate” on inflows from the country’s first sale of dual-tranche eurobonds, while Central Bank Deputy Governor Nandalal Weerasinghe said last week that the $1.5 billion raised from the bond sale had been absorbed into foreign reserves.

The spot rupee was not traded on Thursday.

Spot-next, which are rupee forwards settled three days after the spot rupee settlement, ended at 145.95/10 per dollar compared with Wednesday’s close of 146.10/30.