Rupee eases on importer dollar demand

Reuters: The rupee ended lower on Thursday as importer dollar demand surpassed exporter sales, while fears of US President-elect Donald Trump’s economic policies leading to a stronger greenback thereby triggering foreign fund outflows also weighed.

Dealers see the rupee being under pressure till seasonal inward remittances begin and on expected inflows, including the $200 million after the swap agreement with China Development Bank.

Rupee forwards were active while spot-next forwards ended at 149.00/02 per dollar, compared with Wednesday’s close of 148.90/149.00.

“Today there was some selling, but (the rupee) ended tad weaker due to late importer dollar demand,” said a currency dealer, asking not to be named.

The spot rupee was hardly traded, but was quoted at 148.10/60.

Dealers said the currency has been under pressure on fears Trump’s economic policies might lead to a rise in the dollar and trigger foreign fund outflows.

Foreign investors have net sold 38.93 billion rupees ($262.69 million) worth of government securities in the six weeks ended Nov. 23, ahead of an expected Fed rate hike in December.

Oil swept to a six-week high on Thursday, lifting energy shares in its slipstream, after OPEC agreed to cut crude output to clear a glut, while bond yields rose on prospects that resulting inflationary pressures will lead to higher interest rates.

Stock market up; foreign buying seen

Reuters: Shares jumped more than 1% on Thursday as investors sought bargains in blue-chips and on buying by foreign investors.

The Colombo stock index ended up 1.09% at 6,309.04, its highest close since Nov. 18.

The index hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth.

Foreign investors bought a net 45.4 million rupees ($306,860.43) worth of shares on Thursday, but have been net sellers of 1.59 billion rupees worth of shares so far this year.

Turnover stood at 1.18 billion rupees, more than this year’s daily average of 696.8 million rupees. “Market is very bullish with continued foreign buying,” said Dimantha Mathew, Head of Research at First Capital Equities Ltd. “Early morning buying in John Keells boosted confidence levels and brought the buying in to the market. Excess liquidity in the banking system is also helping the market.”

The Government aims to boost its 2017 tax revenue by 27% to 1.82 trillion rupees year-on-year and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The market shrugged off the Central Bank’s monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates.

Shares of biggest listed lender Commercial Bank of Ceylon Plc jumped 1.43% while Colombo Cold stores Plc rose 3.59% and conglomerate John Keells Holdings Plc rose 1.15%.

Short tenor bond yields continue to edge up

By Wealth Trust Securities

The start of a new month saw continued foreign selling interest on short tenure maturities with the 15.09.19 maturity hitting an intraday high of 11.82% against its previous day’s closing levels of 11.70/75, amid high volumes changing hands. In addition the maturities of 01.09.23 and 01.08.24 were seen changing hands within the range of 12.40% to 12.43% and 12.48% to 12.50% respectively as well. 

Meanwhile in money markets, overnight call money and repo rates averaged at 8.39% and 8.67% respectively as the net surplus liquidity stood at Rs.9.37 billion yesterday. The OMO (Open Market Operations) department of the Central Bank was seen mopping up an amount of Rs.10.00 billion on an overnight basis by way of a Repo auction at a WAvg of 7.40%.

Spot next contracts remain mostly unchanged

In Forex markets, the USD/LKR rate on spot next contracts remained mostly unchanged yesterday to close the day at Rs.148.97/02 as the market was at equilibrium. The total USD/LKR traded volume for 30 November was $ 57.65 million. 

Some of the forward USD/LKR rates that prevailed in the market were one month – 149.77/90; three months – 151.40/60; and six months – 153.90/10.