Rupee hits all-time low; CB intervenes

Reuters: The rupee hit a fresh low on Wednesday on importer demand for the US currency, dealers said, but recovered after the central bank intervened in the market.

The local unit gained for the first time in seven sessions on Tuesday, after hitting a record low in the previous five straight sessions as dollar demand from importers and banks surpassed greenback sales by exporters.

Deputy Central Bank Governor Nandalal Weerasinghe yesterday said the Central Bank intervened on Tuesday and Wednesday after high volatility.

The Central Bank on Friday said it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record $ 10 billion foreign currency reserves.

The rupee hit an all-time low of 157.90 per dollar during trade, but ended at 157.80/158.00 per dollar, marginally weaker from Tuesday’s close of 157.70/90.

It fell 0.9% last week and 1.5% in April.

“Still we see downward pressure on the currency because there are some debt outflows expected next week,” a currency dealer said.

The rupee has weakened 2.7% so far this year. It dropped 2.5% last year and 3.9% in 2016.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the Government.

Foreign investors sold government securities worth a net Rs. 288.6 million so far this year through 25 April, Central Bank data showed.