Rupee forwards slightly weaker on importer dollar demand

Wednesday, 12 November 2014 00:42 - - {{hitsCtrl.values.hits}}

Reuters: The rupee forwards ended a tad weaker on Tuesday due to importer dollar demand, while moral suasion by the Central Bank prevented a fall in the spot currency, dealers said. Traders said the local currency was under pressure as imports continue to rise in a stable exchange rate regime. The spot currency ended flat at 130.90/131.00 per dollar. Dealers said banks were reluctant to trade the spot below 130.90 due to moral suasion by the Central Bank. Three-day forwards, or spot next, which were actively traded, ended at 131.00/05 per dollar compared to Monday’s close of 130.98/131.03. Dealers said the Central Bank capped the spot next at 131.00 in early trade. “The importer (dollar) demand was there,” a dealer said on condition of anonymity. “The spot was not trading below 130.90 and the spot next below 131.00 fearing repercussions.” An official at the Central Bank’s International Operations Department said there was not much of trade and moral suasion on Tuesday. “We have nothing to say now. We don’t see much of trades,” said the official on condition of anonymity. The market expects the local currency to remain weak due to rising seasonal imports at least through November and only start to inch up in December on remittances, dealers said. Overseas investors sold a net Rs. 39.12 billion ($299 million) worth of Government securities in the seven weeks through 5 November, data from the Central Bank showed.

Bourse rebounds

Reuters: Stocks ended up on Tuesday, hovering near 3½-year high hit last week as investors picked up banking shares, while continued foreign buying, low interest rates and better earnings expectations kept investor appetite for risky assets intact. Sri Lanka’s main stock index closed 0.13%, or 9.34 points, up at 7,412.72, near its highest closing level since 31 May 2011 hit on Friday. Shares in Commercial Leasing & Finance Plc, which led the overall gain, rose 4.55% to Rs. 4.60. Shares in top mobile phone operator Dialog Axiata Plc, which reported a 15.6% jump in third-quarter net profit last week, rose 0.81% to Rs. 12.50. Shares in Overseas Realty (Ceylon) Plc rose 3.97% to Rs. 28.80. Conglomerate John Keells Holdings (JKH) Plc fell 0.35% to Rs. 258, while Lanka ORIX Leasing Co Plc (LOLC) fell 2.27% to Rs. 86. “Gains in Commercial Leasing and Overseas Realty offset negative pressure from JKH and LOLC, which helped the overall index. Market turnover continued to fall although net foreign inflow strengthened mainly due to a significant decline in foreign sales,” First Capital Equities Ltd. said in a note to investors. Foreign investors bought a net Rs. 684.4 million ($5.23 million) worth of shares, extending the net foreign inflow so far this year to Rs. 16.56 billion, exchange data showed. Tuesday’s turnover was Rs. 1.64 billion, more than this year’s daily average of Rs. 1.40 billion. Analysts expect trading to be choppy in the near term due to the revised presidential poll schedule in January and a possible bottoming out of interest rates. The Central Bank has kept key policy rates steady for a ninth straight month, saying private sector credit growth was picking up and long-term lending rates were adjusting downwards.