Rupee ends firmer on exporter dollar sales

Saturday, 24 September 2016 00:00 -     - {{hitsCtrl.values.hits}}

Reuters - The rupee ended slightly firmer on Friday, recovering from early losses as exporter dollar sales late in the day and inward remittances surpassed dollar demand for equity-related capital outflows in early trade, dealers said.

Rupee forwards were actively traded and the spot-next forwards ended at 146.30/40 per dollar, firmer from Thursday’s close of 146.35.45. One-week forwards ended at 146.45/55, firmer from Thursday’s close of 146.45/65.

The spot rupee was quoted at 145.90/146.35 compared with the previous day’s 145.90/146.60, but was not traded. Traders were unwilling to trade the spot rupee below 146.00, the level desired by the Central Bank, dealers said.

“There were some exporter conversions and inward remittances in the latter part of the day. That helped the rupee to end stronger, but the rupee will be under pressure with rising imports,” a currency dealer said, asking not to be named.

The rupee currency fell in early trade due to equity-related inflows. Sri Lanka’s share market saw a net foreign outflow of Rs. 867.8 million ($ 5.95 million) on Thursday.

The spot rupee is usually managed by the Central Bank and market participants use the forward market levels for guidance on the currency.

Officials from the Central Bank were not available for comment.

Dealers said the market expects the local currency to face pressure in the coming weeks due to seasonal importer demand, which is expected to continue until mid-December.

The International Monetary Fund (IMF) said on Friday that Sri Lanka’s Government, which has failed to raise taxes as promised when it received a $ 1.5 billion loan from the lender in June, needs to implement a tax reform package without delay.

The IMF also asked the country’s central bank to continue to rebuild international reserves and maintain exchange rate flexibility to further develop the foreign exchange market.