Rupee forwards weaker on importer dollar demand; CB curbs fall

Reuters: The rupee forwards ended slightly weaker on Tuesday due to dollar demand from importers, but dealers said the Central Bank’s intervention via moral suasion prevented a sharp fall in the local currency.
Exporters were reluctant to sell dollars ahead of the Budget announcement for 2015 on Friday, dealers said.
The three-day forwards, trading in the absence of spot, were quoted at 130.90/131.00 per dollar, down from Monday’s closing level of 130.85/95.
“Exporters were very cautious ahead of the budget and there was pressure from importers,” a currency dealer said on condition of anonymity.

Dealers also said the Central Bank persuaded banks not to trade the spot-next below 130.90 after capping it at 130.85 in early trade. Central Bank officials were not immediately available for comment.
The spot currency was neither traded nor quoted for a second straight day. It ended at 130.60/80 on Friday.
A top Central Bank official said on Monday the monetary authority would intervene to prevent short-term volatility in the rupee.
“Even moral suasion or our intervention is to prevent short-term volatility,” said Nandalal Weerasinghe, a Deputy Governor at the Central Bank, at a public forum late on Monday.
“What we have been doing over the last 12 months is to prevent a sharp appreciation of the currency by intervening and bringing in our resources just to maintain some stability.”
Weerasinghe also said the Central Bank expects short-term interest rates to stabilise around 6%, though lower inflation has given it room for further monetary policy easing.
The Central Bank held key policy rates steady on Friday, a day after Governor Ajith Nirvard Cabraal said a rise in the 364-day T-bill yield was a signal of where the authorities want rates to be amid pressure on the rupee from foreign outflows.