Rupee ends lower on importer dollar demand

Reuters: The rupee ended weaker on Tuesday, as demand for the US dollar by importers surpassed mild exporter selling of the greenback, dealers said.

The spot rupee which traded at 153.90 per dollar during the day, closed at 153.80/85, weaker from Monday’s close of 153.75/80.

“The importer demand is there. We didn’t see much exporter (dollar) sales as they are reluctant to sell, expecting further depreciation,” said a currency dealer, requesting anonymity.

“We expect the rupee to weaken around 4.0-4.5% for the whole year.”

The rupee has slipped 2.8% so far in the year.

The rupee came under pressure early this month due to dollar demand from State-run Ceylon Petroleum Corp (CPC), which stocked up crude oil ahead of an expected fuel price hike, dealers said.

Crude prices are expected to rise after private fuel retailer Lanka IOC said it was likely to hike rates as it has been selling at a loss, local media reported late last month.

The currency was expected to weaken on generally higher import demand ahead of the national budget, dealers said. The rupee has been under pressure since January after the central bank stopped defending the currency and started buying the dollar to build the country’s depleted foreign reserves.

The island nation has seen Rs. 19.4 billion ($126.18 million) of net inflows into equities this year as of Tuesday’s close, and Rs. 38.2 billion into Government securities as of 18 October, official data showed.