Rupee ends firmer as State-run bank cuts dollar peg

Thursday, 20 August 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended higher on Wednesday after a State-run bank, through which the Central Bank usually directs the market, reduced the currency’s peg against the dollar by 10 cents to allow the exchange rate to appreciate to 133.90.

The market had expected the Central Bank to allow a slight depreciation in the rupee, in line with other regional currencies that have declined against the dollar.

The rupee ended at 133.90 per dollar, 0.07 percent firmer from Tuesday’s close of 134.00.

“Unless we see heavy inflows from foreign direct investment now that the elections are over, the rupee will be under downward pressure,” said a currency dealer, asking not to be named.

The market expects some business-friendly economic policies and more dollar inflows after the centre-right United National Party (UNP) won Monday’s Parliamentary election.

Prime Minister Ranil Wickremesinghe’s UNP is expected to form a stable government along with President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP), to help pass promised reforms aiming to minimise corruption.