Rupee falls on importer dollar demand

Wednesday, 26 March 2014 00:57 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee ended weaker on Tuesday due to importer dollar demand in the absence of state bank intervention to defend the currency, dealers said. The spot rupee ended at 130.70/75 per dollar, weaker than Monday’s close of 130.65/70. Some deals were done at 130.70 per dollar - breaking the psychological barrier of 130.65, which the state banks were defending on behalf of the central bank, dealers said. “State banks were buying dollars for import bills,” a currency dealer said asking not to be named. The local currency has been largely on the rise ahead of the traditional new year, contrary to market expectations. The rupee usually falls in March and early April due to higher import demand ahead of the Sinhala-Tamil new year. Central Bank Governor Ajith Nivard Cabraal said last week the rupee would be stable throughout this year due to increasing inflows from exports and remittances into the island nation. Dealers said lack of credit demand for imports will help reduce downward pressure on the rupee. The currency gained 0.25% in the 19 sessions through Tuesday, Thomson Reuters data showed. The rupee has trended up since Feb. 27 amid weak demand for dollars from importers, said dealers who expected the currency to trade in a range of 130.50-130.75 in the near term.

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