Rupee slips on importer dollar demand

Thursday, 6 February 2014 00:01 - - {{hitsCtrl.values.hits}}

Reuters: The rupee edged down on Wednesday on importer dollar demand from State banks amid light exporter sales of green back and dealers expect the local currency to depreciate on lower interest rates that could drive credit growth and imports. The spot rupee ended at 130.65/75 per dollar, weaker than Monday’s close of 130.64/67. Both stock and currency markets were closed on Tuesday to mark the country’s independence day. “We saw State banks buying dollars for importers,” said a currency dealer. Dealers expect the currency to depreciate in the near future because of rising credit demand in a low interest rate regime. The US Federal Reserve’s decision and this weekend US statement on bringing in another UN resolution against Sri Lanka will aggravate the depreciation. Dealers said the market was concerned about a possible gradual pull-out of foreign investors from government securities, resulting in depreciation of the currency. Central Bank Governor Ajith Nivard Cabraal last week said Sri Lanka should not experience any major capital outflows or market volatility due to the Fed’s stimulus cut. The rupee has gained about 3.4% since it hit a record low of 135.20 on 28 August. It lost 2.5% in 2013.

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