Rupee forwards end lower on dollar demand for oil imports

Thursday, 6 November 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards fell Wednesday on dollar demand from State banks to pay for oil bills, with traders saying the local currency may face pressure as imports continue to rise in a stable exchange rate regime. The spot currency was quoted at 130.90/131.00 per dollar compared to Tuesday’s close of 130.90/130.98. Dealers said they were reluctant to trade the spot below 130.85 due to moral suasion by the Central Bank. Three-day forwards, or spot next, which are actively traded in the absence of spot, were flat at 131.00/05 per dollar. Dealers said since the Central Bank capped the spot next at 131.00 the four-day forwards have picked up. Four-day forwards closed lower at 131.02/05, compared to Tuesday’s close of 130.95/131.00, dealers said. “There was importer demand from state banks for oil bills,” a dealer said on condition of anonymity. “The spot next was not allowed to trade below 131.00 and the spot next-next (four-day forwards) started to trade.” The market expects the local currency to remain weak due to rising seasonal imports at least through November and only start to inch up in December on remittances, dealers said. Overseas investors sold a net Rs. 36.2 billion ($ 276.90 million) worth of Government securities in the six weeks through 29 October, data from the Central Bank showed.

Secondary market bond yields increase for a second consecutive day

By Wealth Trust Securities Secondary market bond yields were seen increasing marginally for a second consecutive day in thin trade yesterday. Activity was seen surrounding the 15 August 2018, the 1 July 2022 and the 1 January 2024 maturities as yields were seen hitting intraday highs of 7.10%, 7.80 and 7.95% respectively against its previous day’s closing levels of 7.00/05, 7.72/76 and 7.85/88. In secondary bill markets, the 182 day bill was seen changing hands within the range of 5.77% to 5.80% while the 364 day bill was quoted at levels of 5.95% to 6.02%. In money markets, the total surplus amount of Rs. 20.48 b was deposited at Central Bank’s Standing Deposit Facility Rate (SDFR) yesterday as no cash value auctions under its Open Market Operations (OMO) were conducted. However the OMO department was seen mopping up an amount of Rs. 64.12 billion via three term repo auctions at yields of 5.95% for 35 days, 5.96% for 56 days and 6.00% for 77 days respectively, valued for today. Overnight call money and repo rates averaged at 6.01% and 5.72% respectively. Rupee remains steady The dollar/rupee (USD/LKR) rate on spot next contracts remained steady within the range of Rs. 130-Rs.131.03 yesterday. The total USD/LKR traded volume for 4 November was at $ 25.55 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.39; three months – 132.30; and six months – 133.40.