Rupee edges down to 1-week low on bond sales, importer dollar demand

Wednesday, 29 January 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee edged down on Tuesday, hovering near a one-week low on bond outflows and importer demand for the greenback, despite dollar selling by a State bank to prevent the fall, dealers said. The spot rupee ended at 130.80/90 per dollar its lowest since 22 January and weaker from Monday’s close of 130.78/85 per dollar. “There were bond outflows and dollar demand from importers in the morning and we have seen a State bank selling dollars at 130.85,” said a currency dealer. Central Bank Governor Ajith Nivard Cabraal said on Monday Sri Lanka should not experience any major capital outflows or market volatility in the event the US Federal Reserve scales back its stimulus more. However, dealers said a Fed decision to cut the stimulus further will have an impact on the local currency interest rates. “The dollar will give a better earning. So there is a possibility of rupee depreciation,” the dealer said. Dealers said the rupee is expected to fall in the absence of any intervention by the Central Bank due to importer demand. The Central Bank said on 20 January inflows of $ 1 billion from a recent sovereign bond sale would be kept in reserve, contrary to market expectations that a part of the bond proceeding would be allowed to be traded in the market. The rupee has gained about 3.3% since it hit a record low of 135.20 on 28 August. It lost 2.5% in 2013.

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