Rupee edges down; likely to gain on $ 750 b NSB bond inflow

Saturday, 14 September 2013 04:27 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended slightly weaker on Friday as importer dollar demand outpaced banks sales of the US currency but dealers expects the rupee to gain in the short-term due to $ 750 million in inflows from a bond sale by a State-owned bank. The five-year bond from National Savings Bank (NSB) was priced to yield 8.875%, tighter than the initial talk of 9.25%. Dealers said it was still “very expensive” compared with other Sri Lankan debt papers. The rupee spot, inactive for several weeks, was actively traded on Friday for the third straight session and touched 131.80 per dollar early due to expected inflows. It closed at 132.25/35 per dollar, weaker from Thursday’s close of 132.20/30. “Importer dollar demand picked up. But the rupee should appreciate due to NSB inflows,” said a currency dealer. The currency hit a record low of 135.20 on 28 August, before recovering. Dealers said they were waiting for clues from the Federal Open Market Committee meeting early next week to see if the US central bank will trim its bond purchases. The rupee has been falling since early July, as foreign investors started pulling out of local bonds as US Treasury yields rose in expectation of the Fed pullback. Foreign holdings in Government securities have fallen 4.18% to Rs. 482.42 billion ($ 3.65 billion) in the two weeks that ended on 6 September, Central Bank data showed. The rupee has fallen 3.6% this year, after depreciating about 10% in 2012.

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