Central Bank allows spot rupee to rise 10 cents

Central Bank permitted the spot currency to rise by 10 cents for a second session in the week yesterday, while currency forwards also gained due to stock-related dollar inflows, dealers said.

The Central Bank allowed the spot rupee to appreciate by 10 cents to 133.43 after it permitted a 10 cent rise on Wednesday.

The local bourse saw a net foreign inflow of Rs.2.73 billion ($20.48 million) on Thursday, helping the rupee gain, and dealers said strong inflow was also expected yesterday.

“Forwards were trading a tad firmer on stock-related inflows, but the import pressure is still there,” said a currency dealer asking not to than Thursday’s close of 134.70/90.

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.

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 rupee had depreciated 1.5 percent versus the U.S. dollar this year up to May 5, the Central Bank said on May 8.

In the stock market, the benchmark index was up 0.34 percent at 7,261.73 as of 0726 GMT. Turnover stood at Rs.804.1 million ($6.03 million).

- be named. Dealers, however, said some foreign investors in government securities have been selling their rupee-denominated bonds and that might put pressure on the currency along with importer dollar demand in the near future.

The Central Bank let the rupee drift down 60 cents in three calibrated steps since April 30 through Tuesday amid downward pressure on the currency, before allowing it to appreciate 10 cent each on Wednesday and Friday.

Actively-traded two-month forwards were firmer at 135.35/40 per dollar compared with Thursday’s close of 135.50/65. One-month forwards were at 134.60/65 per dollar, firmer

REUTERS