Rupee ends weaker after State-run bank raises dollar peg

Reuters: The rupee ended weaker on Friday after a state-run bank, through which the Central Bank usually directs the market, raised the currency’s peg against the dollar by 10 cents, allowing the exchange rate to depreciate to 134.00.



The market had expected the Central Bank to allow a slight depreciation in the rupee, in line with other regional currencies that have declined against the dollar.

The rupee ended at 134.00 per dollar, 0.07 percent weaker from Thursday’s close of 133.90.

“The market is short of dollars because no export conversions and there are a lot of imports,” said a currency dealer, asking not to be named. “The exchange rate should ideally go up.”

Ranil Wickremesinghe was sworn in on Friday as Prime Minister after winning Monday’s general election, and agreed with President Maithripala Sirisena’s party to form a national unity government to push ahead with reforms.

The market expects the new Government to push through promised reforms to minimise corruption.