Rupee ends weaker; CB moral suasion caps fall

Reuters - The rupee ended weaker on Thursday on importer demand for the US currency, but moral suasion by the Central Bank prevented a steeper fall, dealers said.

Rupee forwards were active, with the one-week forwards ending at 148.40/50 per dollar compared with the previous day’s close of 148.10/25.

Dealers said moral suasion prevented the spot-next trading below 147.70/148.10. The spot-next ended at 147.90/148.10 in the previous session.

The spot rupee was quoted at 146.90/95 per dollar, but there were hardly any trades.

“There was dollar demand, but the Central Bank’s moral suasion prevented the spot-next trading below 147.70 and it forced dealers to trade in one-week forwards,” a currency dealer said, asking not to be named.

The spot rupee is usually managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

Officials from the central bank were not available for comment.

Dealers said foreign selling in government securities also put pressure on the currency.

Foreign investors sold Rs. 8.79 billion ($ 59.84 million) worth of government securities in the week ended 19 October, data from the Central Bank showed.

Dealers said the market was waiting for some direction from the national budget due on 10 November.