Tuesday, 27 May 2014 01:28
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Reuters: The rupee ended a tad up on Monday as late dollar sales by a foreign bank offset importer demand for the greenback, while dealers expect the currency to face upward pressure due to steady inflows until demand for imports and credit pick up.
The rupee ended at Rs. 130.38/42 per dollar, slightly firmer from Friday’s close of Rs. 130.40/45.
“There were some inflows which strengthened the rupee and a foreign bank was selling dollars,” said a currency dealer.
Central Bank Governor Ajith Nivard Cabraal told Reuters on Friday that the currency was performing as the bank expected, and there was no pressure to appreciate or depreciate.
Dealers say the Central Bank had been preventing the rupee’s appreciation over the last few weeks with steady inflows amid lower demand for private sector credit and imports.
While maintaining the policy rate for the fourth straight month on Tuesday, the Central Bank said it expected to introduce a new guarantee scheme for gold loans to boost credit growth that fell to a four-year low in March.
Despite multi-year low interest rates, data last week showed private sector credit grew at a four-year low of 4.3% in March from a year earlier.
The latest trade data on Monday showed imports have gained 8.2% in March, while exports hit a record high of $ 1.07 billion, helping to narrow the March trade deficit by 15.5% compared to a year ago.
Dealers expect the rupee to face upward pressure until credit growth and imports pick up.
Cabraal said on 19 May private sector credit growth would pick up to around 15% by end-2014 and continue to improve through 2016.
