 "Rupee strengthens as RBI intervenes")
The rupee strengthened against the dollar on Wednesday, as the Reserve Bank of India (RBI) intervened in the market through state-run banks to sell dollars. Besides, dollar demand from oil marketing companies (OMCs) was absent, after RBI had indicated it was set to ask them to centralise dollar purchases in a single public sector bank.
This will result in arresting the rupee’s volatility against the dollar. It is expected that the rupee will strengthen further on Thursday.
The rupee ended at 59.66 against the dollar, compared with Tuesday’s close of Rs 60.15. It had opened at Rs 60.04 and during intra-day trade, touched a high of Rs 59.64 and a low of Rs 60.21.
A treasury head with large public sector bank said banks have begun negotiations with oil marketers to firm up a banker through which company to pick up dollars after RBI advised to use one bank for buying dollars.
Rupee was stable due to RBI’s curbs on proprietary trading in foreign exchange derivatives and expectation further steps from the regulator to check volatility.
Both RBI and the stock market regulator had announced measures earlier this week to curb speculation by currency traders. Dealers say more measures might be on the anvil. For instance, RBI might mandate physical delivery for companies that hedge their foreign exchange exposure using letters of credit, compared to the current practice of allowing cancelling and re-booking of hedging contracts.
RBI and the Securities and Exchange Board of India (Sebi) had restricted speculative trading, which helped the rupee to strengthen against the dollar on Tuesday. On Monday in the late evening, RBI asked banks not to carry out any proprietary trading in the currency futures/exchange traded currency options markets. The directive was conveyed by a notification on the website.
The Street expects more moves by the regulators, helping the rupee to strengthen further. On Monday, the rupee had touched 61.22 to a dollar, after the release of encouraging data of US non-farm payrolls, which raised concern that the Federal reserve would begin pulling back its third round of quantitative easing.
The rupee is seen trading in the range of 59.25-60 a dollar on Thursday, said dealers.
This will result in arresting the rupee’s volatility against the dollar. It is expected that the rupee will strengthen further on Thursday.
The rupee ended at 59.66 against the dollar, compared with Tuesday’s close of Rs 60.15. It had opened at Rs 60.04 and during intra-day trade, touched a high of Rs 59.64 and a low of Rs 60.21.
A treasury head with large public sector bank said banks have begun negotiations with oil marketers to firm up a banker through which company to pick up dollars after RBI advised to use one bank for buying dollars.
Rupee was stable due to RBI’s curbs on proprietary trading in foreign exchange derivatives and expectation further steps from the regulator to check volatility.
Both RBI and the stock market regulator had announced measures earlier this week to curb speculation by currency traders. Dealers say more measures might be on the anvil. For instance, RBI might mandate physical delivery for companies that hedge their foreign exchange exposure using letters of credit, compared to the current practice of allowing cancelling and re-booking of hedging contracts.
RBI and the Securities and Exchange Board of India (Sebi) had restricted speculative trading, which helped the rupee to strengthen against the dollar on Tuesday. On Monday in the late evening, RBI asked banks not to carry out any proprietary trading in the currency futures/exchange traded currency options markets. The directive was conveyed by a notification on the website.
The Street expects more moves by the regulators, helping the rupee to strengthen further. On Monday, the rupee had touched 61.22 to a dollar, after the release of encouraging data of US non-farm payrolls, which raised concern that the Federal reserve would begin pulling back its third round of quantitative easing.
The rupee is seen trading in the range of 59.25-60 a dollar on Thursday, said dealers.