Rupee edges down on importer dollar demand

Reuters: The rupee closed slightly weaker on Tuesday on light importer dollar demand, but the currency is expected to trade in a narrow range until the market sees direction from an IMF loan tranche disbursement and sovereign bond sale, dealers said.

The rupee forwards were active, with two-week forwards closing at 153.25/30 per dollar, weaker from Monday’s close of 153.10/20.

“The rupee will be steady between a narrow range of 153.10-153.40 until we see some direction. We don’t see any depreciation pressure now,” a currency dealer said, asking not to be named.

The IMF is yet to approve the third tranche of a $ 1.5-billion loan, and the market expects the approval to help boost sentiment. Finance Minister Ravi Karunanayake met IMF officials in Washington last week.

Government officials have said authorities would go for an up to $ 1.5 billion sovereign bond sale “soon”.

Sri Lanka has seen a surge in foreign inflows into equities and Government securities since early this month.

Foreign investors bought equities worth a net Rs. 12.1 billion in 23 consecutive sessions through Tuesday.

They also bought government securities worth Rs. 4.17 billion in the week ended 19 April on a net basis. However, they have been net sellers to the tune of 58 billion worth of government bonds so far this year.