Rupee forwards close lower on importer dollar demand

Tuesday, 20 January 2015 00:52 - - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended weaker on Monday on dollar demand from importers as lower interest rates and depreciation in some foreign currencies versus the rupee paved the way for more imports, dealers said. Exporters, however, were waiting for clarity on economic policy from President Maithripala Sirisena’s new Government, they said. Three-day forwards, or spot next, ended weaker at 132.50/60 per dollar, compared with Friday’s close of 132.30/40. Four-day forwards, which were actively traded, closed lower at 132.51/60 per dollar compared with Friday’s close of 132.35/45. “The recent depreciation in Japanese Yen, Euro have encouraged more imports. The lower interest rates have also encouraged unusual imports during this period of the year,” a currency dealer said. “We expect the rupee to be steady or move downward with little volatility until March before seasonal imports pick up.” Sirisena, who announced an interim cabinet last Monday, said he would carry out reforms to fight corruption in the 100 days to a parliamentary election. The market is expecting a flexible exchange rate with more foreign grants under the new government as opposed to controlled exchange rate regime earlier. The spot currency was not traded on Monday. Sri Lankan spots traded in a band between 130.00 and 131.75 rupees throughout 2014 following the Central Bank’s move to limit volatility in the currency and ensure a stable exchange rate.

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