By Anil Varma/Bloomberg
Mumbai: India’s rupee fell for a second day on speculation the central bank will sell it to protect exporters after the currency gained for four straight weeks.
The rupee has gained 3.5% in the past month, more than every Asia-Pacific currency apart from the Australian and New Zealand dollars. The Reserve Bank of India will probably sell rupees in the next few weeks when debt sales and an increase in banks’ cash reserves drain money from the banking system, said V Ravi Kumar, director of treasury at Infrastructure Development Finance Corp. in Mumbai.
“The recent gain may have resulted from a change of policy at the RBI, which probably decided not to intervene in the market at a time when cash is plenty in the banking system,” Kumar said. “One would expect the central bank to buy dollars in the next few weeks when the liquidity will come under pressure due to auctions and the cash reserve increase,” he added.