Rupee hits record low on importer dollar demand

Tuesday, 15 September 2015 01:16 - - {{hitsCtrl.values.hits}}

Reuters: The rupee touched an all-time low of 140.00 per dollar on Monday due to importer dollar demand, although it later regained some of the losses after a State bank sold dollars to arrest the fall, dealers said.

The spot rupee fell 0.5% to 140.00 per dollar earlier in the day, from Friday’s close of 139.30/50. The previous record low of 139.30 was hit on Friday.

However, the State bank sold some dollars at 140.00, which dealers said was received by the market as the direction from the Central Bank to support the currency. The rupee closed at 139.85/95 on Monday.

“Still we see pressure from importer side,” a currency dealer said asking not to be named. “We still see a weaker rupee and it is likely to fall further.”

Another currency dealer confirmed that the rupee touched a fresh trough of 140.00 per dollar before the intervention from the State bank.

Officials from the central bank were not immediately available for comment.

The market expects the currency to fall further in the short term if the Central Bank fails to tighten interest rates or the country does not see strong inflows soon.

Some dealers said imports of vehicles might slow down ahead of the next year budget scheduled in November, but imports of fast moving goods would continue as usual.

Finance Minister Ravi Karunanayake said last week that the rupee would be brought to an acceptable level before too long and interest rates, which have been on a rising trend, would be pushed down.