Rupee at 2-1/2-month high on exporter dollar sales, bond inflow

Friday, 10 January 2014 00:17 -     - {{hitsCtrl.values.hits}}

REUTERS: The Sri Lankan rupee ended firmer on Thursday at its 2-1/2-month closing high on exporter dollar sales and foreign buying in rupee bonds while dealers expect the local currency to gain unless the central bank intervenes to keep it at a particular level. The spot rupee closed at Rs. 130.68/75 per dollar, its highest close since 25 October and firmer from Wednesday’s close of Rs. 130.80/90. “There were decent inflows from some exporter conversions and rupee bonds,” a currency dealer said. One of the two state banks, through which the Central Bank directs the market, defended the rupee throughout this week as the local currency faced downward pressure when foreigners bought dollars to exit rupee bonds. But the state bank bought dollars at market rate on Thursday. Dealers said the rupee was under pressure to appreciate in the near future due to the expected inflow from a $ 1 billion sovereign bond, but by how much would depend on what the central bank wanted to do -- whether to buy the inflows to build up its reserves or increase dollar liquidity in the market. The inflow from the sovereign bond is expected next week. The Central Bank on 2 January said it expected the rupee to strengthen in the medium term and any direct intervention in the foreign exchange market would be minimum. The local currency has gained about 3.4% since it hit a record low of Rs. 135.20 on 28 August. It has lost 2.5% in 2013.