Rupee forwards end firmer on State bank dollar sales

Saturday, 4 June 2016 00:39 -     - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended firmer on Friday as a State-owned bank sold dollars to select traders amid moral suasion by the Central Bank and importer demand for the greenback, dealers said.

Dollar/rupee forwards, known as spot next, closed at 147.00/05 per dollar, compared with Thursday’s close of 147.75/90.

Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is five days ahead for Friday’s trade.

“The Central Bank’s moral suasion and a State bank’s dollar selling helped the rupee to gain. The state bank first bought at 147.35 and then raised it to 147.20. Just before the markets closed a foreign bank sold at 147.00,” a currency dealer said.

Two State-run banks, through which the Central Bank usually directs the market, sometimes sell dollars to curb falls in the rupee.

Central Bank officials were not available for comment.

There was little impact on the rupee from Finance Minister Ravi Karunanayake’s announcement on Tuesday that Japan would lend $4.2 billion to Sri Lanka through a loan and bond financing, in the next two years.

The spot currency was not traded on Friday.

The spot rupee reference rate has been pegged at 145.75, dealers said. Sri Lanka’s central bank had fixed the spot rate at 143.90 per dollar until 2 May.

Dealers said the rupee would continue to face pressure despite foreign inflows into Government securities and expectations of further inflows, unless the inflows are large enough to boost reserves.

Foreign investors were net buyers of Rs. 7.23 billion ($49.28 million) in the week ended 25 May, Central Bank data showed.

The Government is in the process of borrowing up to $3.5 billion from foreign sources via syndicated loans, sovereign bonds, and Islamic bonds, Karunanayake said last week.