Rupee ends weaker on importer dollar demand; gains expected
Saturday, 19 July 2014 01:48
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Reuters: The rupee edged lower on Friday due to importer dollar demand but dealers expect upward pressure on the currency to prevail until imports and private sector credit growth pick up strongly.
The rupee ended at 130.28/30 per dollar, compared with Thursday’s close of 130.24/28. On Tuesday, the rupee had closed at 130.18/20, its highest since 28 June 2013.
“Buying pressure (of dollars) from the state banks brought the rupee down,” said a currency dealer, asking not to be named. “But the appreciation pressure is intact and this is just temporary importer demand.”
Dealers said the rupee will still appreciate as there is a lack of strong growth in imports and private sector credit, despite lower interest rates.
Yields in Treasury bills edged down further at a weekly auction on Wednesday.
The Central Bank kept policy rates steady at multi-year lows for a sixth straight month on Monday, as expected, despite private sector credit growth slowing to a 4-1/2-year low. .
Sri Lanka’s trade deficit narrowed by 47.9% to $393.4 million in May from $754.9 million a year earlier, mainly due to lower imports, Central Bank data showed on Monday.
An official from the Central Bank’s International Operations Department told Reuters on Tuesday the rupee would have appreciated to around 125 rupees per dollar had the Central Bank not intervened by absorbing $750 million from the domestic foreign exchange market this year through 14 July.
