Rupee a tad weaker, stocks remain bearish

Thursday, 22 March 2012 01:49 - - {{hitsCtrl.values.hits}}

(Reuters): Sri Lanka’s rupee closed a tad weaker on Wednesday in spite of a state bank’s dollar sales and a central bank forecast of a firmer rupee in the coming weeks due to dollar inflows.

The rupee closed at 130.25/130.50 a dollar, weaker than Tuesday’s close of 129.90/130.00. It hit a record low against the dollar of 131.60 on Monday mainly due to importer demand for greenbacks for the forthcoming April festive season.

Three currency dealers said a state bank sold dollars at 131 to keep the rupee stable.

However, state-run Bank of Ceylon, through which the central bank usually directs the market, said the dollar sale was from worker remittances and was not a central bank intervention.

The rupee has fallen 12.3 percent since the central bank stopped defending a specific price on Feb. 9.

Standard Chartered Bank on Wednesday in a research note said depreciation pressure on the rupee will persist despite the central bank’s recovery forecast.

“We are reviewing our forecasts and expect it to trade in a wide 120-140 range over the coming weeks,” it said.

The stock market meanwhile fell 0.55 percent on lingering uncertainty about high interest rates, the rupee and an expected fall in overall company profits.

The day’s turnover was 376.2 million rupees ($2.88 million), well below last year’s daily average of 2.3 billion. Volume was 18.1 million. Last year’s daily average was a record 102.7 million.

The Colombo bourse is one of the worst performers this year among Asian markets, with a 11.36 percent loss.