Rupee gains on remittances, exporter dollar sales

Saturday, 26 July 2014 05:01 - - {{hitsCtrl.values.hits}}

Reuters: The rupee rose on Friday, helped by heavy inward remittances for the Ramazan festival and exporter dollar sales, while dollar buying by a State bank prevented any sharp appreciation. The rupee ended at 130.20/25 per dollar, firmer from Thursday’s close of 130.23/25. Dealers said State banks also lowered the dollar buying rate by two cents to 130.21, from the previous day’s 130.23, to curb sharp gains in the local currency. “There are heavy inward remittances, probably for Ramazan,” said a currency dealer. Finance Secretary P.B. Jayasundera said on Wednesday Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island nation sees more dollar inflows. Speaking at a Foreign Correspondents’ Association forum, Jayasundera said the choice was to let the exchange rate appreciate and enjoy the short-term gain or let the exchange rate remain flexible within a reasonable level. Jayasundera, the top technocrat in President Mahinda Rajapaksa’s Government, said though technically the Government had the luxury of allowing the rupee to appreciate, the authorities did not want that to happen. The Central Bank has absorbed more than $750 million so far this year, which Jayasundera attributed to a rise in inflows from exports, tourism and remittances. Dealers had been expecting the rupee to appreciate due to weak growth in imports and private sector credit, despite multi-year low interest rates. Private sector credit growth hit a more than 4-1/2-year low of 2.2% in May on the year, compared with 3.3% a month earlier. May imports fell 17.6% on the year to $1.28 billion.

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