Rupee forwards rise amid dollar sales

Reuters: Rupee forwards ended firmer on Thursday, gaining for a third straight day on dollar sales amid expectation that the unit would rise further due to expected inflows, while the spot currency traded steady as a State-run bank sold the greenback, dealers said.

One-week forwards, which were actively traded, ended at 134.10/20 per dollar, compared with Wednesday’s close of 134.20/30.

Three-month forwards, which have been actively traded over the last few weeks in the absence of spot, ended steady at 135.70/136.00 per dollar.

The spot rupee was steady at 133.90 per dollar as a State-run bank, through which the Central Bank usually directs the market, sold dollars at 133.90 for a third straight day, dealers said.

“The pressure eased as a State-run bank sold dollars. The market expects the rupee to appreciate in the short run,” a currency dealer said asking not to be named.

On Monday, the spot currency started trading after nearly six months after the island nation raised nearly $1 billion from bond sales last week.

Sri Lanka raised $650 million last Thursday through an international sovereign bond sale and $388 million from development bonds. 

Dealers said exporters may start selling dollars as inflows from the dollar bond sale would help boost the rupee.

The Central Bank has imposed a 5% penalty on exporters who hold dollars for more than 90 days, and a 2% monthly penalty thereafter, currency dealers said.

Exporters have been reluctant to convert dollars into the local currency as it is cheaper to manage costs with rupee loans in a lower interest rate environment.