Rupee steady for 5th straight session amid importer dollar demand

Wednesday, 2 April 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended steady on Tuesday for a fifth straight session despite importer dollar demand, as banks were reluctant to trade the local currency beyond 130.70 per dollar due to moral suasion by the Central Bank, dealers said. However, dealers said the currency is likely to gain due to expected inflows from remittances in early April. The spot rupee ended steady for the fifth straight session at 130.70/75 per dollar. The rupee forwards were weaker at 130.73/76 per dollar, compared with Tuesday’s close of 130.73/75. But the pressure on the forwards is expected to ease due to remittances, exporter and bank dollar sales ahead of the festive season, dealers said. Dealers said the Central Bank had asked banks to keep the rupee at the 130.70-per-dollar level to reduce volatility On Monday, Nandalal Weerasinghe, one of the Central Bank’s Deputy Governors, told Reuters that the Central Bank has not changed its policy of not targeting any specific rate but moral suasion is one of the instruments many central banks use to manage short-term volatility. Dealers expect the rupee to appreciate from early April, with a dip in importer dollar demand and a rise in inward remittances before the traditional Sinhala-Tamil New Year. Central Bank Governor Ajith Nivard Cabraal said on 19 March that the rupee would be stable throughout this year due to increasing inflows from exports and remittances. Dealers said lack of credit demand for imports will help reduce downward pressure on the rupee. The currency gained 0.25% since 27 February, but has fallen 0.08% so far this year, Thomson Reuters data showed.

Secondary market bond yields dip marginally ahead of weekly auction

By Wealth Trust Securities Activity in secondary bond markets increased yesterday as any upward pressure generated on yields due to selling interest on bulk volumes was negated, as aggressive buying interest set in, which eventually led to yields closing the day marginally lower than its previous day’s closing levels. The liquid two 2018 maturities (i.e. 01.04.208 and 15.08.2018) and the 01.07.2019 maturity were the most actively traded durations, from opening highs of 8.82%, 8.95% and 9.24% respectively to lows of 8.80%, 8.90% and 9.16%. This was ahead of today’s weekly Treasury bill auction, at where a total amount of Rs. 9 billion will be on offer consisting of Rs. 1 billion on the 91-day, Rs. 1.5 billion on the 182-day and Rs. 6.5 billion on the 364-day maturities respectively. At last week’s auction, weighted averages (WAvgs) dipped by 1 basis point (bp) each on the 91-day and 182-day maturities to 6.65% and 6.82% respectively while the 364-day maturity remained unchanged at 7.05%. Meanwhile in money market, the overnight surplus liquidity increased yesterday following the Rs. 103 billion bond maturity yesterday (1 April 2014) as the Open Market Operations (OMO) department of Central Bank drained out an amount of Rs. 10 billion on a two-day basis at a WAvg of 6.55%. Overnight call money and repo rates remained steady. Rupee remains steady The dollar/rupee (USD/LKR) rate remained steady within the range of Rs. 130.70 - Rs. 130.75 for a fifth consecutive day yesterday as markets was at equilibrium. The total USD/LKR traded volume for the previous day (31 March 2014) stood at $ 73.11 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.34, 3-Months: Rs. 132.47 and 6-Months: Rs. 133.94.