Rupee steady on state bank dlr buying; stocks down

Saturday, 12 April 2014 00:00 -     - {{hitsCtrl.values.hits}}

COLOMBO (Reuters): The rupee traded steady on Friday as a State bank bought dollars on inflows from worker remittances and exporter dollar sales, preventing an excess volatility that could result in sharp appreciation, dealers said. The spot rupee traded at 130.58/59 per dollar at 0633 GMT, little changed from Thursday’s close of 130.59/61. “A State bank has been buying dollars at 130.59 and there were inflows from remittances,” a currency dealer said on condition of anonymity. An official at the central bank’s International Operations Department said the bank had bought dollars in the three sessions. “We have been buying excess dollars after State banks’ buying for oil and other imports,” the official said. “We will continue the same strategy today as well.” The market has seen a gradual increase in remittances sent by Sri Lankan expatriates overseas to their relatives, while exporters have been selling dollars to pay bonuses to their employees ahead of a festival next week, dealers said. Dealers do not expect any gains in the local currency from an expected $500 million inflow through a five-year sovereign bond which was sold at a yield of 5.125%. Central Bank Governor Ajith Nivard Cabraal said the entire proceeds of the bond would be absorbed into its foreign currency reserves. Cabraal said on Wednesday at a Reuters’ Global Market Forum that a sharp depreciation or appreciation was unlikely in the rupee “although a gentle trend could perhaps take place.” Before the rupee appreciated on seasonal inflows, the local currency was under depreciation pressure until April 2, but still held steady as dealers were reluctant to trade beyond 130.70 per dollar due to moral suasion by the central bank. Depreciation pressure has now eased due to inflows from remittances and exporter dollar conversion ahead of the Sinhala-Tamil New Year celebrated on April 14. Both stock and currency markets will be closed next Monday and Tuesday for the Sinhala-Tamil New Year and on Good Friday. Sri Lanka’s main stock index was 0.12 percent, or 7.07 points weaker, at 6,067.98 as of 0642 GMT in thin trade as many investors were in a holiday mood.