Tuesday, 4 March 2014 00:41
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REUTERS: The Sri Lankan rupee ended steady on Monday as exporter dollar sales and inflows from remittances outpaced demand for the greenback from importers early in the day, dealers said, and the Central Bank bought a “significant” volume of dollars to defend the currency.
The spot rupee ended at Rs. 130.60/65 per dollar after touching Rs. 130.70 early in the day, little changed from Friday’s close of Rs. 130.55/60, which was its highest level in more than a week.
“We have been buying dollars to prevent appreciation pressure,” an official from the Central Bank’s International Operations Department told Reuters.
“Today’s buying is significant compared to a market of $ 60 million to $ 70 million daily average volume,” he said, without disclosing the volume the Central Bank bought on Monday. A dealer said a state bank, through which the Central Bank directs the market, bought dollars at Rs. 130.65.
Dealers had told Reuters early in the session that the rupee was weaker because of equity-related outflow and little importer demand for dollars.
The Central Bank, however, said it had been buying dollars throughout the day and there were no dollar outflows.
“The rupee did not weaken at all. The Central Bank has already bought around $ 12 million from the market,” Swarna Gunaratne, Head of the Central Bank’s Economic Research Department told Reuters an hour before the market closed.
Dealers said in absence of the central bank dollar buying, the rupee would have appreciated.
Dealers have been expecting a slight depreciation towards Rs. 131 due to equity outflows and importer dollar demand ahead of festival import demand in April. However, the depreciation is expected to be mild as the central bank has strong reserves to defend the rupee.
Foreign investors bought a net Rs. 709 million worth of government securities in the week ended 26 February after being net sellers for the past two weeks, while they sold a net Rs. 5.42 billion in stocks in 16 straight sessions through Monday.
The rupee has gained about 3.5% since it hit a record low of Rs. 135.20 on August last year. It lost 2.5% in 2013.
