Rupee forwards end firmer on bank dollar sales

Thursday, 28 April 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Five-day rupee forwards ended slightly firmer on Wednesday due to dollar sales by foreign banks, which was to facilitate offshore bond buying, while importers awaited direction on the currency, dealers said.

“There were (dollar) selling by some foreign banks. Probably foreigners are buying bonds,” said a local bank currency dealer, requesting not to be named.

A dealer from a foreign bank said foreign investors have been gradually buying in government securities and more inflows could be expected if the government gets the loan from the International Monetary Fund.

Sri Lanka is expected to reach a staff level agreement with the IMF for a loan as early as this week, the Central Bank deputy governor said on Tuesday.

The rupee has been under pressure as foreign investors have sold government securities amid Sri Lanka’s economic woes, but have net bought bonds worth Rs. 11.7 billion ($79.92 million) in the past four weeks till 20 April, Central Bank data showed.

Five-day forwards, which are known as spot next, and act as a proxy for the spot currency, ended at 146.40/45 per dollar compared with Tuesday’s close of 146.50/70.

Dealers were also analysing the impact of Finance Minister Ravi Karunanayake’s move after he asked exporters last week to bring their earnings home, received on or after 1 April, to improve foreign exchange inflows.

Central Bank Governor Arjuna Mahendran on Tuesday said the bank estimates around $3 billion of export earnings are being held abroad by Sri Lankan exporters.

The spot rupee, which has barely seen any trading since 27 January, was not actively traded on Wednesday.

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