Rupee ends weaker on importer dollar demand

Reuters: The rupee ended weaker on Wednesday due to importer dollar demand as hopes of the currency’s appreciation after a recent sovereign bond inflow evaporated, dealers said.

One-week rupee forwards, which have been acting as a proxy for the spot rupee, ended at 146.25/40 per dollar, slightly weaker than Tuesday’s close of 146.10/30.

“Today, there was demand (for dollars) from importers,” said a currency dealer, asking not to be named.

The spot rupee is tightly managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

The market has shrugged off speculation of a strong rise in the rupee as the island nation’s heavy debt repayment reduced the dollar availability for the Central Bank to defend the currency, dealers said.

Finance Minister Ravi Karunanayake said earlier this month that the rupee would “obviously appreciate” on inflows from the country’s first sale of dual-tranche eurobonds, while the Central Bank Deputy Governor Nandalal Weerasinghe said last week that the $1.5 billion raised from the bond sale had been absorbed into foreign reserves.

The spot rupee was not traded on Wednesday.

Spot-next, which are rupee forwards settled three days after the spot rupee settlement, ended at 146.10/30 per dollar compared with Tuesday’s close of 145.90/146.20.