Rupee edges down on importer dollar demand

Tuesday, 25 March 2014 00:05 -     - {{hitsCtrl.values.hits}}

REUTERS: The Sri Lankan rupee ended slightly weaker on Monday due to thin importer dollar demand despite state banks defending it at Rs. 130.65 levels, dealers said. The spot rupee ended at Rs. 130.65/70 per dollar, compared with Friday’s close of Rs. 130.62/65. “There was little importer dollar demand. Banks did not trade above Rs. 130.65 a dollar, which is seen as a desirable level for the Central Bank,” said a currency dealer. Another dealer said banks were asked to keep the rupee at Rs. 130.65 per dollar level through moral suasion, a measure used by the Central Bank to keep the rupee volatility at low. Central Bank Governor Ajith Nivard Cabraal said on Wednesday that the rupee would be stable throughout this year due to rise in inflows through exports and remittances into the island nation. He said the reason behind the unusual gain in the local currency was due to higher remittances and improved exports earnings in the past few months. The Central Bank said on Friday January trade deficit contracted 5.9% year-on-year to $ 756 million. Sri Lanka kept its policy rates steady at multi-year lows on Friday, as expected, as it hopes that slowing private sector credit expansion will rebound and push up the country’s growth pace. Dealers said lack of credit demand for imports will help reduce downward pressure on the rupee. The currency gained 0.29% in the 18 sessions through Monday, Thomson Reuters data showed. It has been on a rising trend since 27 February amid weak demand for dollars from importers, dealers said. Dealers said the rupee was expected to trade in a range of Rs. 130.50 to Rs. 130.75 in the near term.