Thursday, 17 July 2014 01:30
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Reuters: The rupee fell on Wednesday for the first time in 13 sessions, edging down from its highest in more than a year as importer dollar demand outpaced inflows from remittances and exporters’ greenback sales, dealers said.
The rupee ended at 130.20/22 per dollar, a tad weaker than Tuesday’s close of 130.18/20, its highest close since 28 June 2013. “There was importer dollar demand today,” said a currency dealer, asking not to be named. Dealers said the bond market was active in early trade with excess liquidity and were expecting treasury bill rates to come down further. Yields in Treasury bills edged down further at a weekly auction on Wednesday.
An official from the Central Bank’s international operations department told Reuters on Tuesday that the bank was buying dollars from the market to curb excess volatility as there had been continuous inflows in the last few weeks.
The official said the rupee would have appreciated to around the 125-per-dollar level had the Central Bank not intervened to prevent sharp gains.
The Central Bank had absorbed $750 million from the domestic foreign exchange market this year through 14 July, he said.
Dealers early in the trade said the two State banks, through which the Central Bank directs the market, bought dollars at 130.18 per dollar.
The Central Bank kept policy rates steady at multi-year lows for a sixth straight month on Monday, as expected, despite private sector credit growth slowing to a 4-1/2-year low.
Dealers expect the rupee to be under upward pressure due to lack of imports and private sector credit growth.
Sri Lanka’s trade deficit narrowed by 47.9% to $393.4 million in May from $754.9 million a year earlier, mainly due to lower imports, Central Bank data showed on Monday.
