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Thursday Nov 14, 2024
Thursday, 15 December 2016 00:01 - - {{hitsCtrl.values.hits}}
Reuters: The rupee ended weaker on Wednesday as importer dollar demand surpassed selling of the US currency by exporters after a long weekend, while the Central Bank raised the spot reference rate, indicating it did not want the rupee to rise, dealers said.
The rupee usually rises in December ahead of Christmas and the New Year due to remittances from expatriates, but dealers said the rupee was expected to face pressure due to higher dollar demand from importers.
Rupee forwards were active, with spot-next forwards closing at 148.95/149.05 per dollar, compared with Friday’s close of 148.85/95. The markets were closed for public holidays on Monday and Tuesday.
“Today’s (dollar) demand may be due to the long weekend. But the pressure (on the rupee) persists,” said a currency dealer, requesting anonymity.
The central bank on Wednesday raised the spot reference rate by 10 cents to 148.80 rupee per dollar, dealers said. The spot rupee was hardly traded, but was quoted at 148.70/95.
“Central bank raising the reference rate is also putting pressure on the currency as it seems it does not want the currency to appreciate.”
Pressure on the rupee is expected to ease when seasonal inward remittances begin and dollar demand by importers weakens ahead of the year-end festival season, dealers said, adding demand from state banks is holding the rupee steady.
The rupee is expected to be under pressure on fears that US President-elect Donald Trump’s economic policies will lead to a stronger greenback and trigger foreign fund outflows, some dealers said.
Foreign investors have net sold Rs. 45.4 billion ($ 305.6 million) worth of government securities in the seven weeks ended 7 December.
The US Federal Reserve will conclude its two-day policy meeting later on Wednesday and is widely expected to raise interest rates.
