Rupee gains on exporter dollar sales

Thursday, 1 December 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended higher on Wednesday as exporter dollar sales surpassed importer demand for the greenback after the central bank said it was in advance talks with China Development Bank for a $ 200 million swap.

However, dealers expect the rupee to be under pressure till seasonal inward remittances begin.

Rupee forwards were active while spot-next forwards ended at 148.90/149.00 per dollar, compared with Tuesday’s close of 149.15/25.

“There was month-end selling (of dollars) today and no major demand (for dollars),” said a currency dealer, asking not to be named.

The spot rupee was hardly traded, but was quoted at 148.40/149.00. Dealers said the currency has been under pressure on fears of US President-elect Donald Trump’s economic policies leading to a rise in the dollar and trigger foreign fund outflows.

Foreign investors have net sold Rs. 38.93 billion ($ 262.69 million) worth of government securities in the six weeks ended 23 November, ahead of an expected Fed rate hike in December.

Stock market edges up

Reuters: Shares ended slightly higher on Wednesday as investors sought bargains in blue-chips but concerns over recent budget tax proposals weighed on sentiment.

The Colombo stock index ended up 0.15% at 6,241.10, ending three sessions of losses.

The index hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth, analysts said.

“Market is up on bargain-hunting by foreigners but it’s not a major factor at the moment unless the trend is going to continue,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

“I feel it’s like a one-off thing. Investors are concerned over the current uncertainty and we could see volatility in the market with the current economic uncertainty.” The Government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion year-on-year and meet a commitment given to the International Monetary Fund in return for a $ 1.5 billion loan in May.

The market shrugged off the Central Bank’s key monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates.

Turnover stood at Rs. 579.6 million ($ 3.89 million), much less than this year’s daily average of Rs. 694.6 million.

Foreign investors bought a net Rs. 48.1 million worth of shares on Wednesday, but have been net sellers of Rs. 1.64 billion worth of shares so far this year.

Shares of conglomerate John Keells Holdings Plc jumped 2.63% while Dialog Axiata Plc rose 2.97% and Ceylon Tobacco Company Plc rose 0.47%.