Rupee up; exporter dollar sales outpace importer demand

Tuesday, 14 June 2016 00:48 -     - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended higher on Monday as dollar conversions by foreign investors and exporters outpaced importer demand for the greenback amid foreign buying in local bonds, dealers said.

The spot rupee, which was traded actively for a fourth straight day, was also up, they added.

Dollar/rupee forwards, known as spot next, ended at 144.90/145.00 per dollar, compared with Friday’s close of 145.00/05.

Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is three days ahead for Monday’s trade.

Dealers said the spot currency, which on Wednesday started trading actively for the first time since 18 January, was active for a fourth day in a row on Monday.

The spot rupee ended at 144.85/95 per dollar, compared with Friday’s close of 144.95/145.05.

“There has been a lot of interest in local bond buying by Europeans, mainly from the British, before the Brexit,” a currency dealer said, asking not be named.

“We see sudden interest by these British investors. There are some new funds as well.”

Dealers said the Central Bank was intervening in the market to keep the rupee steady.

Foreign investors had bought a net Rs. 8.47 billion ($58.53 million) worth of Government bonds in the week ended on 8 June, the latest Central Bank data showed.

Dealers expect the rupee to strengthen further, after the IMF approved a three-year $1.5 billion loan to support the country’s economic reform agenda.

Prime Minister Ranil Wickremesinghe told parliament on Thursday that the Government would take measures to abolish the Exchange Control Act, but did not provide any timeframe.