Rupee ends slightly down on importer dollar demand

Reuters - The Sri Lankan rupee edged lower on Thursday as late importer dollar demand surpassed selling of the greenback by banks to defend the local currency, dealers said.

The rupee ended at 143.85/95 per dollar, edging down from Wednesday’s close of 143.80/90.

“There is importer (dollar) demand but a private bank is selling dollars at 143.80. This is preventing the fall,” said a currency dealer, requesting not to be named.

A few dealers said the private bank could have sold dollars on behalf of the Central Bank. Officials at the Central Bank were not available for comment.

The market expects the depreciation pressure on the rupee to ease due to a rise in commercial banks’ statutory reserve ratio by 150 basis points from 16 January, which is in line with the Central Bank ‘s monetary policy announcement last month, and expected inflows from foreign deposits.

The yield on 91-day t-bills rose 40 basis points to over three-month high of 6.78 percent in three weekly auctions since the 30 December  monetary policy announcement.

Commercial banks parked Rs. 47.2 billion rupees of surplus liquidity on Thursday using the Central Bank’s deposit facility at 6 percent, while they borrowed Rs.600 million through the Central Bank’s lending facility at 7.5 percent, official data showed.

Stocks and foreign exchange markets will be closed on Friday for a Hindu religious holiday. Normal trading will resume on Monday.