The Central Bank on Wednesday allowed the spot to appreciate 10 cents to 133.40 from Tuesday's level of 133.50. Dealers said the domestic currency still faced pressure from rising imports and growth in credit.
Actively traded two-month forwards were steady 135.65/75 per dollar. One-month forwards were also steady at 134.70/90 per dollar as the central bank defended their levels through moral suasion, dealers said. "It's a dull day, but import pressure is there and exporters are keeping away," said a currency dealer.
Dealers also said the spot rupee did not trade on the day as the banking regulator used moral suasion to prevent deals below 133.40. This intervention ploy, which is widely used by the central bank, reflects concerns over potentially destabilising fluctuations in the rupee.
Since April 30, the central bank through three interventions has let the spot rupee fall 60 cents or by 0.45 percent, including a 20-cent cut on Tuesday and a 30-cent reduction on May 6.
The spot had been held firm at 132.90 since February until April 30. On Monday, Finance Minister Ravi Karunanayake rejected claims by currency dealers that the rupee was under pressure.
Courtesy: Daily News 15 May 2015