Rupee edges up on exporter dollar sales

Thursday, 24 November 2016 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: The rupee ended slightly firmer on Wednesday as dollar selling by exporters in late trade outweighed importer demand for the greenback on fears that US President-elect Donald Trump’s policies would lead to a rise in rates and the dollar.

Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed raises interest rates next month, dealers said.

Rupee forwards were active with spot-next forwards closing at 148.50/60 per dollar after declining to a low of 148.80. They had ended at 148.60/70 per dollar on Tuesday.

“We saw exporter selling when the rupee traded at 148.80. This has been the trend for the last few occasions and I think this will be the trend for the next few days also,” said a currency dealer asking not to be named.

The International Monetary Fund (IMF) released the second tranche of loan worth $162.6 million under its $1.5 billion loan programme, and said the country’s macro-economic and financial conditions had begun to stabilise.

The downward pressure on the rupee is now expected to ease with investors awaiting actions from the Central Bank after the IMF loan money flows in, dealers said.

The Central Bank on Friday revised the spot rupee reference rate to 147.95 per dollar from 147.75.

The spot rupee was hardly traded on Wednesday, but was quoted at 148.00/60.

The rupee has been under pressure as exporters were reluctant to sell dollars due to global concerns and uncertainties in the local market following the National Budget, which has proposed a revision in corporate and withholding taxes.

The rupee is also pressured by the exit of foreign investors from Government securities due to the new taxes proposed in the Budget, dealers said.

Foreign investors net sold Government securities worth 37.12 billion rupees ($250.81 million) in the five weeks ended on 16 November, data from the Central Bank showed.