Rupee ends weaker

Tuesday, 1 September 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee closed lower for a second straight session on Monday as a State-run bank, through which the Central Bank usually directs the market, raised the currency’s peg against the dollar ahead of a monetary policy meeting.

The Central Bank of Sri Lanka is expected to keep its policy rates unchanged at record lows at its policy meeting later in the day, a Reuters poll showed.

The State-run bank raised the rupee’s peg to the dollar by 20 cents, allowing the exchange rate to depreciate to 134.50. The rupee ended 0.15% weaker at 134.50 per dollar compared with Friday’s close of 134.30.

“The depreciation pressure is there but the pressure eased during the latter part of the day with some inward remittances,” said a currency dealer asking not to be named.

The state-run bank raised the currency’s peg against the dollar by 15 cents on Friday, allowing the exchange rate to depreciate to 134.30.

Currency dealers expect the Central Bank to let the currency weaken due to importer dollar demand and a global trend of currencies falling against the dollar.

Analysts say the rupee may fall to 138 levels in the short term if the Central Bank allows it to depreciate further.