Rupee closes firmer on weak demand for dollar

Reuters: The rupee closed firmer on Tuesday as exporter dollar sales and inward remittances surpassed demand for the US currency from importers, dealers said.

The Central Bank on Tuesday said it has received $ 292.1 million in first payment from the leasing of Sri Lanka’s main southern port to the China Merchant Port Holdings Co. Ltd. and the proceeds has been credited to the US Dollar account of Government of Sri Lanka maintained at the Central Bank.

The spot rupee, which traded at 152.85 during the day, ended at 152.65/75 per dollar, compared with Friday’s close of 152.80/153.00.

“Import demand was not there. There are inward remittances and banks are also selling, expecting the rupee to strengthen as import demand is not there,” said a currency dealer.

The rupee has lost 2% so far this year, but currency dealers say dollar demand has slightly waned, lending support to the domestic currency.

The market has been waiting for more clarity over a foreign exchange management act introduced by the government last month.

Foreign investors have net bought equities worth Rs. 18.37 billion ($ 120.18 million) this year as of Tuesday’s close. They bought government securities worth a net Rs. 63.4 billion as of 20 December, official data showed.

Both the currency and stock markets were closed on Monday for a holiday.