Five-day rupee forwards steady amid dollar sales by state bank

Reuters : Five-day rupee forwards ended steady on Friday as dollar selling by a state bank helped offset demand for the greenback from importers, dealers said.

The forwards, which act as a proxy for the spot currency and are called spot next, ended flat at 146.20/50 per dollar.

It hit an intra-day high of 145.00 per dollar on Thursday as a state bank sold dollars. This was seen by brokers as an intervention from the Central Bank to keep the currency steady.

The spot rupee, which has not been active since 27 January, did not trade. The Central Bank has fixed the spot trading price at 143.90 through moral suasion, dealers said.

Central Bank officials were not available for comment.



“The state bank intervention was there today also. The state bank sold (dollars) in the range of 146.00 to 146.30 for select trades,” a currency dealer said asking not to be named.

The one-week forwards, which have been active since 27 January and were, hovering near record lows, did not actively trade on Friday for a second straight session, the dealers said.

The rupee has been under pressure due to foreign investors exiting government securities and amid the country’s economic woes.

Sri Lanka’s 2015 borrowing jumped more than 25 % compared with the previous year due to high cost of refinancing loans, raised by the previous government without parliamentary approval, the finance minister said last week.

The Central Bank on Tuesday kept key policy rates steady, and said it was gauging the impact of recent tightening measures amid government efforts to secure a $1.5 billion IMF loan, which is needed to avert a balance of payments crisis.

For the week, foreign investors bought government securities on a net basis for the first time since the first week of January. They bought Rs. 1.19 billion worth of government securities in the week ended 30 March, data from the Central Bank showed.

However, they had sold a net Rs. 82.52 billion ($568.12 million) worth government securities since 30 December through Wednesday.