Spot rupee ends steady; forwards weaker

Reuters: The rupee ended steady in dull trade on Monday as a state-run bank, through which the Central Bank usually directs the market, sold dollars at 133.70, but the supply of greenbacks did not meet demand by importers, dealers said.

“The state bank is selling at 133.70, but the demand (for dollars) is seen as the supply is low,” said a currency dealer asking not to be named.

“The pressure is building up again as with the announcement of elections the (dollar) selling might stop a bit and exporters might wait for a longer period.”

President Maithripala Sirisena dissolved Parliament on Friday and scheduled the election for 17 August, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

The Central Bank kept key policy rates steady at record lows, as expected, on Friday before the markets opened, and said prospects of improved performance in advanced economies along with low inflation and low market interest rates would benefit local economic activity.

Depreciation pressure on the currency eased, dealers said, after Finance Minister Ravi Karunanayake said last week that the spot would climb 3% to a two-year high of 130 per dollar in two weeks.

Dealers however said that with the announcement of the elections, the rupee may not reach that level.

Three-month forwards traded at 135.45/55 per dollar, weaker from Friday’s close of 135.25/35 due to lower dollar supply.