Rupee hits record closing low; CB intervenes

Reuters: The rupee closed marginally weaker yesterday and ended at a record closing low, prompting the Central Bank to sell dollars to support the domestic currency, dealers said.

The rupee ended at its record closing low of 157.90/158.10 per dollar, compared with Wednesday’s (9 May) close of 157.80/95.

The currency hit an all-time low of 157.90 per dollar on 2 May. It has declined 0.2% so far this month after a 1.5% fall in April.

“The market was dull today as investors are worried over the global uncertainties on top of local issues,” a currency dealer said, asking not to be named. “The Central Bank sold to select banks at Rs. 157.90 per dollar.”

Officials at the Central Bank were not immediately available for comments.

The dollar eased slightly from 2018 highs ahead of US April inflation numbers yesterday, and as currency markets eyed the Bank of England’s policy meeting and inflation report.

Last week, the Central Bank Senior Deputy Governor Nandalal Weerasinghe said the rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency. 

The Central Bank said on 26 April that it would intervene to support the rupee when necessary, and that there was no reason for the rupee to be under pressure given the country’s record $10 billion foreign currency reserves.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the Government, but Weerasinghe said yesterday that debt repayment by the Government will not have an impact on the currency.

Foreign investors sold Government securities worth a net Rs. 5.7 billion ($36.20 million) in the week ended 2 May, bringing the outflow so far this year to Rs. 5.8 billion, Central Bank data showed.