Rupee up on exporter demand

Reuters: The rupee edged up on Wednesday on exporter demand for the currency, dealers said.

The rupee closed at 133.70/80 to the dollar, slightly firmer than Monday’s close of 133.80/90. The rupee hit another in a series of record lows on 28 June at 134.30.

“The rupee appreciated a bit due to exporter dollar conversions,” said a currency dealer on condition of anonymity. “The rupee may rise further as imports will decline due to continuously rising interest rates.”

Yields in 91-, 182- and 364-day T-bills edged up to three-year highs at a weekly auction.

The Central Bank has taken several stringent policy measures this year aimed at cutting imports, including raising policy rates twice to two-year highs and restricting credit growth, though a prolonged drought has increased oil imports for thermal power.

Dealers expect pressure on the rupee to ease if the central bank stops aggressive dollar buying. The Central Bank, which was a big buyer of dollars last month, told Reuters on Friday that Sri Lanka had met all June-end IMF targets for the last tranche of a $ 2.6 billion loan.

The rupee has lost 17.5 per cent of its value since November, when the Government allowed a three per cent devaluation. The sharp fall drove the annual inflation rate to a 41-month high in June, data showed on Friday.