Rupee ends weaker on importer dollar demand

Thursday, 25 May 2017 00:16 - - {{hitsCtrl.values.hits}}

Reuters: The rupee closed lower on Wednesday on higher demand for dollars from importers, but selling of the US currency by state-run banks capped losses, traders said.

Rupee forwards were active, with spot-next forwards closing at 152.90/153.00 per dollar, compared with Tuesday’s close of 152.80/90.

One-week forwards ended at 153.05/15, compared with the previous session’s close of 152.90/153.00.

“There was sizeable demand (for dollars) today, and (during the) latter part of the day two state banks sold dollars,” said a currency dealer.

Sri Lanka’s Central Bank has purchased around $ 400 million directly from the market so far this year, governor Indrajit Coomaraswamy said last week, adding it was targeting $ 1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year.

Dealers said the Central Bank’s plan will keep the rupee under pressure, with the market expecting about 4-6% depreciation in the currency this year.

The spot rupee did not trade on Wednesday.

The Central Bank fixed the spot rupee reference rate at 152.50 on 5 May.

The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.