Rupee edges up on expected inflows

Reuters - Rupee forwards closed slightly higher on Friday as exporters sold the dollar, while the market awaited inflows from sovereign bond and syndicated loans, dealers said.

The spot rupee, which did not trade for four months, was traded on Friday, two days after the Central Bank adjusted the spot reference rate to 152.10 from 151.90.

Dealers said spot rupee started trading on Friday after a state bank bought the dollars at 152.50 per dollar. It ended at 152.50/70 per dollar.

The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times. It has said that defending the currency with foreign exchange reserves does not “seem sensible.”

Sri Lanka drew a blowout response in its return to the international bond market, attracting orders of more than $11 billion from 500 accounts for a $1.5 billion 10-year bond.

Rupee forwards active during the past few weeks, and two-week forwards ended a tad firmer at 153.00/20 per dollar, from Thursday’s close of 153.25/35.

“Today the spot rupee traded after a gap as a state bank bought dollars at 152.50,” a currency dealer said.

“With the bond sales, importers are not seen in the market and they are waiting to see the outcome of bond sales.”

Currency dealers expect the rupee to stabilise on higher dollar liquidity after the anticipated inflows.

An International Monetary Fund (IMF) statement late on Wednesday also helped boost sentiment. The global lender said its executive board was likely to consider in June Sri Lanka’s request for the completion of a second loan review, a requirement for disbursing a third tranche of aid.

The rupee has been strengthening on expectations of inflows from a sovereign bond issuance and syndicated loans, dealers said.

The country expects to raise up to $1.5 billion via a sovereign bond issuance, and another $1 billion from two separate syndicated loans.

The island nation has seen inflows into equities and government securities since early April.

Foreign investors have net bought Sri Lankan shares worth Rs. 14.1 billion in the last 30 sessions.

They also net-bought government securities worth Rs. 1 billion in four consecutive weeks that ended on 26 April. They have, however, net-sold Rs. 57 billion worth of government bonds so far this year.