Rupee ends marginally higher as banks sell dollar

Reuters: The rupee ended slightly higher on Monday as a foreign and a local bank sold dollars, offsetting importer dollar demand, dealers said.

The rupee currency was under pressure on the demand from importers and was seen easing further after the Central Bank said it would buy dollars directly from the market to boost reserves.

The Central Bank is targeting $ 1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, Indrajit Coomaraswamy, the monetary authority’s chief, said on Thursday.

A currency dealer said the market was awaiting policies from the new finance minister, Mangala Samaraweera, after President Maithripala Sirisena switched the finance and foreign ministers in a Cabinet reshuffle on Monday in a bid to restore confidence in the administration’s handling of the economy.

“Everybody is awaiting for the direction from the new finance minister. We don’t know whether he will push through the reforms of the former minister or he will have his own,” the dealer said.

The new appointment came after Sri Lanka missed its December-end reserves target agreed with the International Monetary Fund (IMF) for a $ 1.5 billion, 36-month loan.

Rupee forwards were active, with spot-next forwards ended at 152.85/95 per dollar, compared with Friday’s close of 152.90/153.00.

Two-week forwards ended at 153.20/35, compared with the previous session’s close of 153.30/40.

Dealers said the rupee ended firmer due to dollar sales by a foreign bank and a state bank and it was not clear whether the state banks sold dollars on behalf the Central Bank.

Central Bank officials were not immediately available for comment.The spot rupee did not trade on Monday.The Central Bank fixed the spot rupee reference rate at 152.50 on 5 May.

Coomaraswamy said the Central Bank has purchased around $ 400 million directly from the market so far this year.The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.

Bourse dips on profit-taking in blue chips

Reuters: Shares edged down on Monday as investors booked profits in blue chips such as John Keells Holdings Plc, with analysts saying the market was waiting for policy direction from newly-appointed finance minister Mangala Samaraweera.

President Maithripala Sirisena switched the finance and foreign ministers in a Cabinet reshuffle on Monday, in a bid to restore confidence in the administration’s handling of the economy.

The Colombo stock index ended 0.04% weaker at 6,726.90, slipping from its highest close since 7 January, 2016 hit on Friday.

The index rose 0.83% last week, and has climbed 11% since 31 March through Friday.

Turnover stood at Rs. 335.6 million ($ 2.20 million), well below this year’s daily average of Rs. 887.3 million.

“The market is struggling to break the current psychological level. The market need a bit of a breather before it kickstarts again. We are seeing a bit of profit-taking,” said Dimantha Mathew, head of research, First Capital Holdings Plc.

Foreign investors net sold shares worth Rs. 30.6 million on Monday, but they have net bought Rs. 17.98 billion worth of shares so far this year.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 3.41%, while conglomerate John Keells Holdings Plc ended 0.30% weaker.