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Tuesday, 19 July 2016 00:22 - - {{hitsCtrl.values.hits}}
Reuters: The rupee fell on Monday as state-run banks bought dollars to meet demand for the US currency from importers, even as inflows from a sovereign bond issue, which dealers say would lift the local currency, are expected starting later in the day. Finance Minister Ravi Karunanayake said last week the rupee would “obviously appreciate” on inflows from Sri Lanka’s first sale of dual-tranche eurobonds, which raised $ 1.5 billion.
Rupee one-week forwards, which have been acting as a proxy for the spot rupee, ended at 146.70/80 per dollar, compared with Friday’s close of 146.25/35.
“There was dollar buying by state banks to cover import bills.
Though there was no moral suasion, the market did not trade spot rupee and it adjusted to sell one-week forwards,” a currency dealer said asking not to be named.
“The eyes are on what the Central Bank is going to do with the $ 1.5 billion bond inflow. If it is used to boost the reserves, it will be boost for the currency. If the Central Bank is going to use it for debt payment, then there will be downward pressure on the rupee again.”
Sources with knowledge of the bond deal said the inflows were expected to trickle in starting later on Monday.
The spot rupee was not quoted, but the spot-next, which are rupee forwards settled three days after the spot rupee settlement, ended at 146.60/70 per dollar, weaker than Friday’s close of 146.00/15.
The spot rupee is tightly managed by the Central Bank and market participants use the forward market levels for guidance on the currency.
