Rupee drops

Wednesday, 31 July 2013 00:45 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee ended weaker on Tuesday to hover near a 10-month low, with dollar demand from importers exerting further downward pressure on the currency though the central bank asked market participants not to accept bids above 131.60 rupees, dealers said. The rupee closed at 131.65/70, slipping from Monday’s close of 131.55/65. It had closed at 131.65/75 on Thursday, its lowest close since Sept. 19. “There was some importer demand. But the central bank is not allowing bids above 131.60,” said a currency dealer. Other traders confirmed that the central bank directed banks not to accept bids above 131.60 as it tried to contain the rupee’s decline. They said the market is, instead, turning to the one-day forwards due to the constraints on spot bids. Officials at the central bank were not immediately available for comment. Dealers expect the rupee to move in a range of 131.50 to 132 in the short term and said the currency would continue to depreciate unless the central bank took some monetary tightening measures. The rupee has fallen 4.1% since June 7 as foreign investors pulled out of Sri Lanka’s treasury bonds due to a rise in U.S. treasury yields.

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