Rupee forwards end weaker on importer dollar demand

Friday, 2 January 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended weaker on Thursday due to mild importer dollar demand and exporters stayed away hoping for further weakening of currency but the Central Bank capped the fall. Four-day forwards, which were actively traded, ended at 132.20/30 per dollar compared with Wednesday’s close of 132.10/20. The Central Bank capped four-day forwards at 132.20 through “moral suasion,” dealers said, referring to intervention to prevent volatility. “The trade was mild, but the pressure is there as the exporters are on the sideline and not selling as they are expecting currency to weaken in line with the regional currencies,” a dealer said. A Central Bank official at the International Operations Department denied using moral suasion to cap the four-day forwards on Thursday. Rupee forwards were maintained around 132.00 in December as the Central Bank defended the currency through moral suasion. The spot currency or spot next was not traded on Thursday. Dealers said unusually high imports towards the end of 2014, amid lower interest rates and a stable exchange rate, had pressured the rupee. The spot currency maintained between 130.00 and 131.75 rupees throughout 2014, with the Central Bank defending the currency at both ends to ensure a stable exchange rate. It fell 0.3% for the year, Thomson Reuters data showed.

Yields remain steady as activity dries up

By Wealth Trust Securities Activity in secondary bond markets dried up yesterday with the frequently quoted maturities of 15.08.2018 and 01.07.2022 changing hands within the range of 7.12% to 7.14% and 7.72% to 7.74% respectively against its previous day’s closing levels of 7.12/18 and 7.73/75. In addition, the four-year maturity of 01.07.2019 and the six-year maturity of 01.05.2021 were seen quoted at levels of 7.12/18 and 7.32/40 respectively. Meanwhile in money markets, overnight call money and repo rates increased further to average 6.25% and 6.08% respectively despite overall surplus liquidity increasing to Rs. 30.07 billion yesterday. The total amount was deposited at Central Bank’s Standing Deposit Facility as no cash valued auctions under its Open Market Operations (OMO) were conducted yesterday. However the OMO department was seen mopping up an amount of Rs. 45.23 billion via two-term repo auctions at yields of 6.05% for 56 days and 6.14% for 77 days, valued today. Two –way quotes on rupee widens further The two-way quote on the dollar/rupee (USD/LKR) rate for spot next and spot next-next contracts widened further yesterday to close the day at Rs. 132.15/30 and 132.20/35 respectively. The total USD/LKR traded volume for 31 December 2014 was US $ 33.66 million. Some of the forward dollar rates that prevailed in the market, 1 month - 132.85; 3 months - 133.70 and 6 months - 134.80.