Rupee firmer on exporter sales; Fed eyed

Tuesday, 17 September 2013 00:45 - - {{hitsCtrl.values.hits}}

REUTERS: The Sri Lankan rupee traded tad firmer on Monday led by exporter dollar sales, while the broader market was waiting for cues from the US Federal Reserve’s policy meeting later in the week, dealers said. The Fed meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases from the current pace of $ 85 billion a month. Dealers said any reduction may prompt foreign investors to exit Sri Lankan Government securities and that could put the rupee under pressure. The rupee spot, inactive for several weeks, was actively traded on Monday for the fourth straight session, trading at Rs. 132.20/30 per dollar at 0540 GMT, firmer than Friday’s close of Rs. 132.25/35. “Internationally the dollar is weaker,” said a currency dealer. “The pressure (to weaken) is still there, but in the short run it will remain at these levels.” Some dealers expect the rupee to appreciate in the short term due to $ 750 million in inflows from a bond sale by a state-owned bank. The rupee has fallen 3.6% this year, after depreciating about 10% in 2012. It hit a record low of Rs. 135.20 to the dollar on 28 August. The rupee has been falling since early July, as foreign investors started pulling out of local bonds as US Treasury yields rose in anticipation of the Fed pullback.

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