Rupee steady at record low on dollar selling by State bank

Reuters: The rupee ended steady at its record low on Monday in dull trade as a State-run bank, through which the Central Bank directs the markets, offered dollars at 134, dealers said.

Central Bank Governor Arjuna Mahendran last week said the country should let market forces determine its rupee exchange rate and warned that trying to buck the global trend of a rising dollar is “suicidal”.

The spot currency closed steady at 134.00 per dollar on Monday, its record low hit in the previous session on Friday.

“The rupee is steady as the State bank is selling dollars at 134.00,” a currency dealer said on condition of anonymity.

Currency dealers said hopes that the rupee would strengthen on rising inflows were fading as the currency had come under pressure due to a strong US currency, political uncertainty ahead of a parliament poll and foreign selling in rupee bonds during the last few days.

The market expects the rupee to be stable as long as the central bank offers dollars, but its stability will depend on inflows into the country, currency dealers said.

Finance Minister Ravi Karunanayake said on Thursday that Sri Lanka is planning to borrow $1 billion via five-year syndicated loans as early as this week from international banks and it could borrow up to $2 billion.

One-week forwards ended steady at 134.15/35 per dollar, while actively traded three-month forwards ended at 135.84/135.90 per dollar with compared to Friday’s close of 135.90/136.00.