Rupee ends down on importer dollar demand ahead of new year

Reuters: The rupee edged down on Tuesday as importer dollar demand and dividend payments outpaced mild inward remittances, dealers said.

Rupee forwards were active, with two-week forwards ending at 153.30/45 per dollar, compared with Friday’s close of 153.00/10.

The markets were closed for a Buddhist holiday on Monday.

“Dollar demand was there from a foreign bank and sizable demand for either repatriation of profits or dividend was also there,” said a currency dealer who requested anonymity.

“There was not much of (dollar) supply as most of the companies are closed for the New Year.”

Sri Lanka will celebrate its traditional new year this week and the markets will be closed on Thursday and Friday.

The rupee has been under pressure due to increased seasonal imports ahead of the new year, although dealers expect the pressure to ease with seasonal inward remittances.

Outflows due to rupee bond sales by foreign investors have also been putting pressure on the currency.

Foreign investors net bought Government securities worth Rs. 259.5 million ($1.71 million) in the week ended 5 April. However, they are net sellers worth Rs. 63.9 billion of such instruments so far this year.