Anil Varma and sam Nagarajan/Bloomberg
New Delhi/Mumbai: The rupee fell from the highest level in nine years, ending four days of gains, on speculation that the central bank sold the currency to stem a rally that threatened to erode export earnings. The central bank has been under pressure to intervene and stem the rise of the rupee; however, there was no confirmation whether the bank had done this.
State-owned banks, acting on behalf of the Reserve Bank of India (RBI), probably bought more than a billion dollars in the past week, said Agam Gupta, Mumbai-based head of currency and derivatives trading at Standard Chartered Plc. The rupee’s 8.3% gain this year is hurting exporters such as Tata Consultancy Services Ltd and Infosys Technologies Ltd. “The rupee’s appreciation will stall, in spite of capital inflows, as long as the central bank intervention continues,” Gupta said.
The rupee fell 0.1% to 40.59 against the dollar as of the 5pm close in Mumbai, according to Bloomberg data. It rose as much as 0.2% earlier in the day to 40.50, the highest intraday level since 22 May 1998.
The rupee is the fourth-biggest gainer among the world’s currencies this year and the best performer among Asia-Pacific currencies.
Tata Consultancy, India’s biggest software maker, said on 17 April that profit in the quarter through March rose 47% to Rs1,170 crore, compared with Rs1,210 crore forecast by analysts.
Infosys said rupee gains cut operating margins by a percentage point in the same quarter.