Rupee ends slightly weaker on importer dollar demand

Wednesday, 25 January 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended slightly weaker on Tuesday as importer dollar demand outpaced mild greenback sales by exporters, while the market expects the downward pressure to continue until some steady foreign inflows come in, dealers said.

Rupee forwards were active, with two-week forwards ended at 150.95/151.05 per dollar after it traded at 151.10/20 in early trade, compared with Monday’s close of 150.90/151.10.

However, the dollar steadied on Tuesday, recovering from a dip on fears that U.S. President Donald Trump’s focus on protectionism over fiscal stimulus suggested his administration might be content to gain a competitive advantage through a weaker currency.

The spot rupee was quoted around the central bank’s reference level of 150.15, dealers said.

“This downward pressure will persist until we see steady inflows,” a currency dealer said, asking not to be named.

Dealers also said exports could be hurt as severe drought conditions hit production of tea and other commodities. The rupee has been under pressure due to rising imports, net selling of government securities by foreign investors and a central bank decision to adjust the spot rupee reference rate to a record low of 150.15 rupees to the dollar.

Central Bank officials were not immediately available for comment.

Sri Lanka’s Central Bank sold $ 458 million worth of development bonds on Thursday and investors say they expect the move will take ease the pressure on the rupee.

Foreign investors have net sold Rs. 19.8 billion ($ 132.00 million) worth government securities in the two weeks ended 18 January, according to the latest Central Bank data.