Rupee, Bourse down

Saturday, 21 April 2012 02:09 - - {{hitsCtrl.values.hits}}

The rupee edged down on Friday due to importer dollar demand despite the Central Bank saying $ 574 million inflows are expected within a month.

The rupee ended at 120.20/30 against the dollar, weaker than Thursday’s close of 129.70/90. It fell to 130.60 intraday, but a State-owned bank sold dollars at 130.40, helping the currency to recover.

The Central Bank said on Friday that there was no need to intervene in the market as the country would see $ 574 million of inflows within a month.

However, many dealers said the market would react only when the inflows come in and they still believe the currency warranted further depreciation.

The currency has depreciated 12.2 per cent since the Central Bank stopped defending it on 9 February after repeatedly saying there would not be any depreciation in 2012 followed by a three per cent devaluation on 21 November.

“Intervention will not help now as we still see heavy importer demand,” said a currency dealer on condition of anonymity.

Sri Lanka’s stock market fell 1.1 per cent or 61.59 points to 5,457.13 on profit taking after a more than two per cent jump in the previous session as the Securities and Exchange Commission (SEC) suspended a 10 per cent price band on price movements.

The market has been declining recently due weakness in the rupee, rising market interest rates, and the Government raising fuel prices by up to 40 per cent.

The day’s turnover was Rs. 622 million ($ 4.79 million), well below this year’s daily average of 1.31 billion rupees.

The market, however, saw a net foreign inflow of 52 million rupees, extending the net foreign buying to 21.3 billion rupees so far in 2012.

The Colombo Bourse is one of the worst performing Asian markets this year, losing 10.2 per cent.