Rupee ends weaker on importer dollar demand

Thursday, 21 July 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended weaker on Wednesday due to dollar demand from importers, even as a top Central Bank official said proceeds from a sovereign bond issue, which dealers say would lift the local currency, have flowed in.

“Once the money comes in, it is obviously part of our reserves,” Central Bank Deputy Governor Nandalal Weerasinghe told Reuters on Wednesday, adding the $1.5 billion raised from the bond issue has already come into the country.

Last week, Finance Minister Ravi Karunanayake said the rupee would “obviously appreciate” on inflows from Sri Lanka’s first sale of dual-tranche eurobonds.

Sri Lankan rupee one-week forwards, which have been acting as a proxy for the spot rupee, ended at 147.00/20 per dollar, compared with Monday’s close of 146.70/80.

Markets were closed on Tuesday for a Buddhist religious holiday.

The spot rupee is tightly managed by the central bank and market participants use the forward market levels for guidance on the currency.

Dealers said dollar demand from importers dragged the currency down.

“Now the central bank can intervene a bit more actively since the reserves have gone up. But so far we have not seen them intervening,” a currency dealer said, asking not to be named.

The spot rupee was not quoted. But the spot-next, which are rupee forwards settled three days after the spot rupee settlement, ended weaker at 146.90/147.10 per dollar compared with Monday’s close of 146.60/70.