Rupee ends firmer as exporters sell dollar

Friday, 24 February 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended firmer on Thursday as exporters sold the US dollar, but concerns over possible further depreciation in the domestic currency in the absence of Central Bank guidance weighed on the sentiment, dealers said.

Rupee forwards were active with two-week forwards ending at 152.50/70 per dollar, compared with Wednesday’s close of 153.40/70. It hit a low of 153.70 in early trade.

The two-week forwards had fallen 1% since Monday through Wednesday, before rising 0.6% on Thursday.

“There were some exporter conversions which helped the rupee forwards to end firmer,” said a currency dealer asking not to be named.

The currency continued to be under pressure due to dollar demand from importers ahead of the traditional Sinhala-Tamil New Year in mid-April, while foreign investors continue to sell government securities, dealers said.

Foreign investors have net sold $ 325.70 million worth of securities in the seven weeks to 15 February, surpassing the total net foreign outflow of $ 324.3 million in the comparable period in 2016, according to the latest Central Bank and government data.

The currency weakness comes at a time when a mission from the International Monetary Fund (IMF), which has asked the Central Bank to maintain a flexible exchange rate, is in Colombo for the second review of a $ 1.5 billion loan.

Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed last week, even as the island-nation is in the process of raising up to $ 2.5 billion from foreign borrowing.

The rupee has weakened 1.1% so far this year. It fell 3.9% last year, following a 10% drop in 2015.

The forex market will remain closed on Friday for a Hindu religious holiday.