The Indian rupee was knocked off a one-week high on Tuesday by suspected central bank intervention, and ended weaker after traders decided the safest option was to pare their holdings of the local currency. The late selling drove the rupee to a close of 40.79/80 per dollar, easing from Monday's 40.7725/7825 after it had been stronger for most of the session.
The rupee hit a nine-year high of 40.28 in late May, but has since been broadly trading in a 41-40.50 band, and traders said the Reserve Bank of India had repeatedly capped its gains. "The market was pretty quiet today, but there was a fair amount of short (dollar) covering at the end of the day," said a senior dealer with a private bank.
The rupee hit a one-week high of 40.68 in early trade on a positive outlook for foreign investment flows. Suspected intervention first blocked its path and then, in the last half hour of trade, pushed it lower, dealers said. The rupee has gained about 8.5 percent against the dollar this year, powered by strong capital inflows, to be Asia's strongest currency against the dollar.
The RBI bought $2.06 billion through intervention to keep the rupee in check in April, taking its total purchases to $24 billion for the six months from November. It is widely suspected of selling rupees over the past month to keep the dollar above 40.50 rupees.
Comments
Comments are closed for this article.