Rupee falls on importer dollar demand

Wednesday, 22 January 2014 00:00 -     - {{hitsCtrl.values.hits}}

REUTERS: The Sri Lankan rupee ended weaker on Tuesday due to importer dollar demand despite a state bank selling dollars, a day after the Central Bank said inflows of $ 1 billion from a recent sovereign bond sale would be kept in its reserves, contrary to market expectations. The spot rupee closed at Rs. 130.75/80 per dollar weaker from Monday’s close of Rs. 130.75/77. Dealers said one of the two state banks, through which the Central Bank usually directs the market sold dollars at Rs. 130.75, but the rupee was still weaker. Swarna Gunaratne, Head of the Central Bank’s Economic Research Department, told Reuters after the market closed on Monday that the Government had kept the inflows from last week’s bond sale in the Central Bank’s reserves. Sri Lanka sold a $ 1 billion sovereign bond issue on 6 January. Strong reserves will help the Central Bank defend the currency from depreciating, but that might hurt sentiment, said a currency dealer. Exporters would stay away at least for a few months until the rupee is weaker, he said. The Central Bank had said on 2 January it expected the rupee to strengthen in the medium term and any direct intervention in the foreign exchange market would be minimum. The rupee has gained about 3.4% since it hit a record low of Rs. 135.20 on 28 August. It lost 2.5% in 2013.