Rupee ends firmer on exporter dollar sales

Thursday, 2 March 2017 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended firmer for a fourth straight session on Wednesday as greenback sales by exporters and banks outpaced importer dollar demand, dealers said.

Rupee forwards were active with two-week forwards ending slightly firmer at 151.70/80 per dollar, compared with Tuesday’s close of 151.80/152.00.

Spot rupee ended steady at 151.25/40 per dollar.

“There was some (dollars) selling from a state bank time-to-time. I don’t think it is the intervention. They must have sold their positions,” said a currency dealer, who requested not to be identified.

“There were no (foreign) bond sellers in the past few days, that is the main reason for the currency to stay at these levels.”

Dealers added that exports could be hurt as severe drought has affected the production of tea and other commodities.

“The rupee will be under pressure with higher oil imports due to drought,” the currency dealer said.

The rupee is under pressure due to dollar demand from importers ahead of the traditional Sinhala-Tamil New Year in mid-April, and as foreign investors continue to sell government securities, dealers stated. Sri Lanka’s fuel imports in January jumped to double typical monthly levels, with the country rushing to plug an energy shortfall as severe drought hits its hydropower output, industry sources said.

Foreign investors sold a net Rs. 15.37 billion ($ 101.62 million) in the week ended 22 February, extending the outflow from government securities to Rs. 64.5 billion. Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a Government document showed last week, even as the island nation was in the process of raising up to $ 2.5 billion from foreign borrowing.

The rupee has weakened 1% so far this year. It fell 3.9 percent last year, following a 10% drop in 2015.


Stock market down in dull trade

Reuters: Shares fell on Wednesday to their lowest close in nearly three weeks as concerns about rising interest rates continued to hurt investor sentiment.

The Colombo stock index ended down 0.21% at 6,121.43, its lowest close since 9 February. Turnover was Rs. 382.2 million ($ 2.53 million), around half of this year’s daily average of Rs. 663.6 million.

“The market is still holding grounds because of good (corporate) results in the last quarter and some dividend announcement,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Shares of Ceylon Cold Stores Plc fell 4.11%, while conglomerate John Keells Holdings Plc declined 0.21%.

Foreign investors were net buyers of Rs. 111.9 million worth of shares, extending the year-to-date net foreign inflow to Rs. 599.6 million worth of equities.

Yields on treasury bills have risen to a more than four-year high since October, while the Central Bank has kept key policy rates on hold.