Five-day rupee forwards edge down on importer dollar demand

Reuters: Five-day rupee forwards dropped lower Tuesday on importer dollar demand even as a state-run bank prevented further falls in the currency by selling the greenback, dealers said.

The forwards, which are known as spot next and act as a proxy for the spot currency, ended at 146.50/60 per dollar, compared with Monday’s close of 145.85/146.00.

“Demand (for dollars) is there. A State bank sold dollars from 146.20 to 145.70,” said a currency dealer requesting not to be named.

The spot rupee, which has barely witnessed any trading since 27 January, was not actively traded on Tuesday as well.

The rupee has been under pressure as foreign investors have sold Government securities amid the country’s economic woes, but they have net bought bonds worth Rs. 8.84 billion ($60.42 million) in the last three weeks, latest Central Bank data showed.

Sri Lanka borrowed 25% more in 2015 than it did in 2014, due to high cost of refinancing loans raised by the previous Government without Parliamentary approval.

But the country will stop excess Government borrowing in a bid to get out of a debt trap, said Central Bank Chief Arjuna Mahendran last week.