Rupee slips on seasonal importer dollar demand

Reuters:  The rupee ended weaker on Monday as seasonal demand for dollars from importers exceeded sales by exporters and banks, dealers said.

The spot-next forwards, which were actively traded, ended at 146.38/48 per dollar, edging down from Friday’s close of 146.30/40. One-week forwards were at 146.50/68, weaker from Friday’s close of 146.45/55.

The spot rupee ended at 146.35/45 per dollar, compared with 145.90/146.35 quoted on Friday.

“We see some usual seasonal importer demand coming into the market and the market expects the rupee to be under downward pressure until December,” a currency dealer said, asking not to be named.

The spot rupee is usually managed by the central bank and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank is expected to keep its key interest rates steady on Wednesday, after cutting three times since December to fend off pressure on the fragile rupee and curb accelerating credit growth that has pushed up inflation.

The central bank is also under pressure from the International Monetary Fund (IMF) to continue to rebuild international reserves and maintain exchange rate flexibility to further develop the foreign exchange market.