Rupee forwards slip on late importer dollar demand

Saturday, 25 April 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended a tad weaker on Friday as late importer dollar demand outpaced early inflows of the greenback, while pressure on the local currency is seen persisting through the middle of this year on lower interest rates, dealers said. Actively traded one-month forwards ended weaker at 134.75/95 per dollar, compared with Thursday’s close of 134.70/90. “Importer demand came to the market later in the day,” said a currency dealer asking not to be named. Two-week and one-week forwards were steady at 133.90/134.00 and 133.60/70 per dollar, respectively. The Central Bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February. Central Bank officials were not available for comment. Currency dealers said the political uncertainty was weighing on investor confidence and putting pressure on the exchange rate after President Maithripala Sirisena’s 100-day program ended on Thursday. Sirisena, who promised to dissolve Parliament after the end of his 100-day program on 23 April, addressed the nation later on Thursday and sought support of all legislators to pass the constitutional and electoral reforms. The Government will present constitutional reforms, including establishing independent Police, Judiciary, and Election and Public Service Commissions, in Parliament on Monday and debate on them for two days before voting. Currency dealers said the rupee would be under pressure through June as credit growth is expected to hit a peak due to lower interest rates. The Central Bank on 15 April in a surprise move cut key rates to record lows and said the outlook on balance of payments remains favourable in 2015.

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