Rupee ends weaker on importer dollar demand

Thursday, 29 June 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended weaker on Wednesday on late dollar demand from importers while the rupee was under pressure on an expected rise in imports, dealers said.

The spot rupee, which has been trading for the seventh straight session after being inactive for six weeks, traded at 153.48 during the day before closing at 153.40/50 per dollar, weaker from Tuesday’s close of 153.32/40.

The spot rupee resumed trading on 19 June for the first time since 5 May when the Central Bank fixed its reference rate at 152.50.

“The (dollar) demand was there but volumes were thin,” said a currency dealer, requesting anonymity.

Dealers said they expect seasonal demand for the dollar to pick up from August.

Investors shrugged off a policy rate decision by the Central Bank, which held key rates steady as expected, dealers said.

The Central Bank kept its benchmark interest rate steady on Friday, saying the current monetary policy was appropriate as it expected the economy to recover in the second half of the year.

The rupee has been under pressure after the Central Bank said it would allow gradual depreciation of the currency and set a target of $1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, mainly to meet a target set by the International Monetary Fund for a three-year $1.5 billion loan.

Analysts have said that if the US Federal Reserves tightens monetary policy more aggressively than the market expects over the coming months, there is a risk of further falls in the rupee against the US dollar.