Importer dollar demand drags rupee down

Friday, 23 August 2013 01:52 -     - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee hit an 11-1/2-month low against the dollar on Thursday due to importer demand for the greenback and as some foreign investors sold government bonds, dealers said. The market expects the local currency to depreciate further with foreign investors exiting treasury bonds and exporters holding onto dollars. Dealers said banks switched to one-day currency forwards in an inactive spot market. The spot rupee fell to 132.30 per dollar, its lowest since Sept. 14, Thomson Reuters data showed. It had closed at 132.20 on Wednesday. The spot next or one-day forward closed at 132.15/30 per dollar, falling from Wednesday’s close of 132.05/15. “The rupee weakened on demand (for dollars) from some foreigners (bond holders) and importer,” one dealer said. The rupee fell around 4 percent between June 7 and July 18, after foreign investors started pulling out of Sri Lanka’s treasury bonds due to a rise in U.S. treasury yields. The benchmark 10-year note yield is hovering around a two-year high at 2.9195 percent.