Rupee ends lower on importer dollar demand

Reuters: The rupee closed slightly weaker on Wednesday led by dollar demand from importers, but inflows of the US currency through inward remittances capped the fall, dealers said.

The spot rupee closed at 153.77/85 per dollar, compared with Tuesday’s close of 153.73/80.

“Conversions were there by the exporters and (there were) inward remittances also. But the inflows were offset by the demand (for dollars),” said a currency dealer who declined to be named. The rupee has lost 2.7% so far this year, and dealers say it is expected to face pressure with imports of more low-end vehicles on which the government has cut taxes.

The market has been awaiting for some clarity over a foreign exchange management act introduced by the government this month.Central Bank Governor Indrajit Coomaraswamy said the new act will decriminalise offences involved with the foreign exchange trading.

“Instead there will be fines. It will also make foreign exchange trading easy,” Coomaraswamy told Reuters on the sideline of an investment forum in Colombo late on Tuesday.

The Government imposed new taxes on high-end vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 Budget presented earlier this month.

Foreign investors net bought equities worth Rs. 18.2 billion ($ 118.41 million) this year as of Wednesday’s close. They net bought government securities worth Rs. 46.7 billion as of 22 November, official data showed.