Rupee forwards steady despite importer dollar demand

Friday, 24 April 2015 01:18 - - {{hitsCtrl.values.hits}}

Reuters: Rupee forwards ended steady on Thursday on the Central Bank’s moral suasion despite importer dollar demand, dealers said, while pressure on the local currency is seen persisting through the middle of this year on lower interest rates. Actively traded one-

month forwards ended steady at 134.70/90 per dollar. “Dealers were reluctant to trade due to the moral suasion but there is downward pressure,” said a currency dealer asking not to be named. Two-week and one-week forwards ended steady at 133.90/134.00 and 133.60/70 per dollar respectively. The Central Bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February. Central Bank officials were not available for comment. Currency dealers also said the political uncertainty was weighing on investor confidence and putting pressure on the exchange rate as President Maithripala Sirisena’s 100-day program ends on Thursday. Sirisena, who promised to dissolve Parliament after 100 days from his election, is scheduled to address the nation later in the day and analysts expect him to explain his policies for political stability and implement the promised constitutional and electoral reforms. Currency dealers said the rupee would be under pressure through June as credit growth is expected to hit a peak due to lower interest rates. The Central Bank on 15 April in a surprise move cut key rates to record lows and said the outlook on balance of payments remains favourable in 2015. Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party did not have a majority in Parliament. President Maithripala Sirisena had promised to dissolve parliament after 23 April and go in for parliamentary elections.