Rupee edges down on light importer dollar demand
REUTERS: The rupee ended slightly weaker on Thursday as light importer dollar demand outpaced late exporter dollar selling, while dealers expected the Sri Lankan currency to remain stable in the near-term.
The spot rupee ended at Rs. 130.61/63 per dollar, slightly weaker from Wednesday’s close of Rs. 130.60/61.
“We see importer dollar demand coming in with inflows (remittances) drying up,” said a currency dealer, adding that the market was waiting to see if the Central Bank would defend the rupee or allow movement in the exchange rate.
The benchmark 91-day Treasury bill yield dropped to its lowest since January 2007, data showed on Wednesday, a day after the central bank kept policy rates steady at multi-year lows. ,
Many dealers said they are surprised by the lower credit demand from the private sector even though key interest rates have been at multi-year lows since January.
Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the Central Bank showed. That compared with growth of 5.2% in January this year and 13.3% in February 2013.
The Central Bank, in its monetary policy statement on Tuesday, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion.
Dealers expect the rupee to trade in a range of Rs. 130.60-70 in the near future. It has been hovering between Rs. 130.55 and Rs. 130.70 since 3 March, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.