Wednesday, 27 November 2013 00:21
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Reuters: The rupee ended weaker at a more than six-week low on Tuesday due to outward remittances and as banks traded the greenback at a higher level, dealers said.
The spot rupee closed at 131.15/25 per dollar, its lowest since 17 October and weaker from Monday’s close of 131.10/20.
Three-day forward or spot next, which was actively traded in the market, ended weaker 131.45/50 per dollar, down from Monday’s close of 131.22/25, dealers said.
“Large transactions of outward remittances put the pressure on the rupee. The spot was largely ignored and the spot-next was active,” a currency dealer said on condition of anonymity.
Dealers said the rupee was under pressure and the banks started trading the spot at 131.15 after authorities tolerated a five cent increase from 131.10 level.
Since 17 October, banks had been reluctant to trade the rupee beyond 131.10 per dollar, a level seen desirable by the Central Bank. Dealers said the currency will be under downward pressure because of continuing importer dollar demand, but it will recover due to expected exporter conversions and foreign remittances ahead of Christmas.
While presenting the 2014 Budget, President Mahinda Rajapaksa, who is also the Finance Minister, said last week maintaining a flexible exchange rate regime along with productivity improvement is important to achieve the export revenue target of $20 billion in 2020.
Dealers and banks, however, said there would be hardly any change in the Central Bank’s exchange rate policy as it was already under a flexible regime.
The rupee hit a record low of 135.20 on 28 August, but has managed to stem further losses and has gained 3.05% since then.
