Rupee ends weaker on importer dollar demand

Reuters : The rupee fell on Friday due to importer demand for the greenback while dollar buying by the Central Bank also weighed on the market, dealers said.

The spot rupee ended at 153.70/75 per dollar, slightly weaker from Thursday’s close of 153.65/70.

“There is some off-market importer demand. We do not see much importer demand because it is an off season. The rupee would have slightly appreciated if not for the Central Bank’s dollar buying,” said a currency dealer, asking not to be named.

Central Bank officials were not immediately available for comments.

Central Bank Deputy Governor Nandalal Weerasinghe told Reuters on Wednesday that the bank had completely stopped defending the rupee unlike in the past.

The Central Bank has only been buying dollars since February, and not sold any at all, Weerasinghe said.

The Central Bank does not see any pressure on the rupee and the currency is determined through market-driven demand and supply, he added.

The market has priced in further depreciation due to the Central Bank’s no-intervention policy, dealers said.

The rupee has dropped around 2.6 percent so far this year.

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

Dealers said they expected seasonal demand for dollars to pick up from August.

The Central Bank is compelled to buy dollars from the market to meet the reserve target set by the International Monetary Fund under a $1.5 billion, three-year loan program.