Rupee edges up on Treasury comments

Friday, 23 March 2012 00:01 - - {{hitsCtrl.values.hits}}

Rupee to strengthen to at least 125/dlr-Treasury sec
Dealers wary of rupee rebound as CB buys dollars
Stock market down; foreign outflow at Rs. 10.4 m

Reuters: Sri Lanka’s rupee closed a tad firmer on Thursday after the island nation’s treasury secretary forecast the currency would stabilise at 125 to the dollar, dealers said.

An hour before the market closed, Treasury Secretary P.B Jayasundera said the rupee should strengthen to that level once seasonal importer demand for dollars ends in mid-April.

The rupee closed at 130.10/130.30 a dollar, edging up from Wednesday’s close of 130.25/130.50. It hit a record low against the dollar of 131.60 on Monday mainly due to importer demand for greenbacks for the upcoming April festive season.

“It looks that the initial pressure for rupee is off for bit,” said a currency dealer on condition of anonymity.

However, many dealers were skeptical of a rupee recovery, since the central bank has been absorbing all the dollars coming into the country to boost its foreign exchange reserves.

The rupee has fallen 12.2 percent since the central bank stopped defending a specific price on Feb. 9.

The stock market fell for a fourth straight session, losing 0.64 percent or 34.40 points to 5,349.70 in low trade as investors remained cautious about interest rates, the rupee and an expected fall in overall company profits.

T-bill rates rose by 35 to 33 basis points to 11.11 percent to 10.75 percent at an auction on Wednesday.

The day’s turnover was 354.1 million Sri Lanka rupees ($2.72 million), lowest since Jan.6 and well below last year’s daily average of 2.3 billion. Volume was 15 million. Last year’s daily average was a record 102.7 million.

Foreign investors were net sellers of 10.4 million on Thursday. But they are net buyers of 20.1 billion rupees worth of shares so far this year, after a net outflow of 19.1 billion last year.

The Colombo bourse is one of the worst performers this year among Asian markets, with a 11.93 percent loss.

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