Rupee forwards rise; spot allowed to climb 10 cents

Reuters: Rupee forwards gained slightly on Friday due to stock-related dollar inflows, dealers said, while the country’s Central Bank in a surprise move let the spot currency rise 10 cents, after allowing it to trade up 10 cents on Wednesday.

The Central Bank has permitted the rupee to depreciate 60 cents in three calibrated steps since April 30 through Tuesday amid downward pressure on the currency, but it reversed the trend to enable it to move up on Wednesday and Friday.

“Forwards ended a tad firmer on stock-related inflows, but the import pressure is still there,” said a currency dealer asking not to be named.

Some foreign investors in Government securities were selling rupee-denominated bonds, dealers said, and that might put pressure on the currency along with importer dollar demand.

Foreign investors sold Rs. 2.1 billion ($15.74 million) worth of Government securities during the week ended 13 May, Central Bank data showed on Friday.

Actively-traded two-month forwards ended firmer at 135.35/40 per dollar compared with Thursday’s close of 135.50/65. One-month forwards ended at 134.50/60 per dollar, firmer than Thursday’s close of 134.70/90.

The rupee’s gains also came after the local bourse saw net foreign inflow of Rs. 2.73 billion ($20.48 million) on Thursday, stockbrokers said.

The Central Bank allowed the spot to appreciate to 133.30 on Friday, but dealers said the spot rupee did not trade on the day as the banking regulator used moral suasion to prevent deals below 133.30.

The Central Bank has been preventing high volatility and sharp movements in the currency through moral suasion since December. Central Bank officials were not available for comment.

The rupee has depreciated 1.5% versus the US dollar this year up to 5 May, the Central Bank said on 8 May.