Rupee edges down on importer dollar demand

Saturday, 20 January 2018 00:04 - - {{hitsCtrl.values.hits}}

Reuters - The rupee closed slightly weaker on Friday as dollar demand from importers and banks surpassed mild selling of the U.S. currency by exporters, dealers said.

The spot rupee ended at 153.90/154.00 per dollar, compared with Thursday’s close of 153.85/95.

“The demand (for dollars) was there from importers and some banks to settle foreigners who are selling bonds,” said a currency dealer.

The rupee might witness volatility with the government’s heavy debt repayment this year, said dealers.

The Government aims to raise $500 million this month via development bonds, the Central Bank said last week, as the Government faces unprecedented debt repayment this year.

President Maithripala Sirisenea’s administration must repay an estimated Rs. 1.97 trillion ($12.85 billion) in 2018 - a record high - including $2.9 billion of foreign loans, and a total of $5.36 billion of interest.

Foreign investors had sold 3.2 billion rupees worth of government securities this year up to 10 January, Central Bank data showed.

The currency fell 2.5% last year and 3.9% in 2016.

The Central Bank, while announcing its key economic policies for the year on 3 January, said it has allowed more flexibility in determining the exchange rate based on the present market conditions.

It added intervention policies will be adopted consistent with a flexible exchange rate regime and supportive of improving foreign exchange market functionality, and maintaining a competitive exchange rate will be an important objective.

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