Rupee recovers from all-time closing low

Reuters: The rupee gained for the first time in seven sessions on Tuesday, edging up from a record closing low hit in the previous session, dealers said. The currency hit a record low for the past five straight sessions as dollar demand from importers and banks surpassed selling of the greenback by exporters.

The Central Bank on Friday said that 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 closed at 157.70/90 per dollar, marginally firmer from Friday’s all-time closing low of 157.85/95. The markets were closed for a holiday on Monday.

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

Sri Lankan markets opened on Tuesday after the government, citing a Buddhist celebration on Sunday and Monday, decided to celebrate workers day on 7 May.

“We see some kind of stability in the market. The rupee is holding below 158 level. Exporters have started to convert and that has helped a little bit to ease the pressure,” a currency dealer said.

A long-awaited cabinet reshuffle which finally took place on Tuesday failed to impress some market watchers looking for an end to the country’s political uncertainty.

The rupee has weakened 3% 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.