Rupee ends tad weaker in light trade

Saturday, 19 September 2015 01:03 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee ended a tad weaker on Friday in thin trade as late importer dollar demand surpassed inward remittances, a day after the currency recovered from all-time lows hit in the previous four straight sessions.

On Thursday, the rupee fell to a record low of 140.98 per dollar before recovering as a state-run bank, through which the central bank usually directs the market, sold dollars to limit the fall. Currency dealers said exporters also later sold dollars.

The spot rupee ended at 140.55/65 per dollar on Friday, compared to Thursday’s close of 140.50/60. It has fallen 4.1 percent since the central bank effectively floated it on Sept. 4.

“There was some importer demand in the latter part of the day,” said a currency dealer asking not to be named.

The market expects the currency to fall further in the short term if the central bank fails to tighten interest rates or the country does not see strong inflows soon, dealers said.

The rupee float has won a thumbs-up from rating agencies and economists, but more reforms will be needed to support the currency and conserve the central bank’s modest reserves.

In a bid to curb dollar outflows on vehicle purchases, the central bank on Tuesday imposed a 70 percent limit on loans and advances for vehicles, a move seen aimed at easing demand for credit and stemming dollar outflows.