Rupee recovers on inflows, exporter dollar sales
Reuters: The rupee ended firmer on Tuesday due to remittances from migrant workers and exporter dollar sales ahead of the festive season, but a State bank greenback buying capped the appreciation in the local currency, dealers said.
The spot rupee which strengthened 0.1% to 130.55 during the day ended at 130.57/63 per dollar, firmer from Monday’s close of 130.68/70.
“If not for the State (bank) buying, rupee would have strengthened further. There were inflows and the demand we have seen last week was not there,” said a currency dealer.
Dealers said the rupee is likely to trade between 130.50 and 130.80 in the short to medium term and could appreciate further if the Central Bank does not intervene.
Sri Lanka sold a $ 500 million, five-year sovereign bond at a yield of 5.125% and the Central Bank Head on Tuesday said the entire bond proceed will be absorbed to its foreign currency reserves.
The local currency had been steady at 130.70 per dollar for the six sessions through Wednesday, as dealers were reluctant to trade due to moral suasion by the Central Bank, before it appreciated on seasonal inflows.
Depreciation pressure is seen easing due to expected inflows from remittances that will prompt dollar selling by banks.
The currency has gained 0.38% since 25 February, but has lost 0.14% so far this year, Thomson Reuters data showed.