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Saturday, 30 May 2015 01:49 - - {{hitsCtrl.values.hits}}
Reuters: Rupee forwards ended steady on Friday as pressure on them eased amid hopes the local currency would gain after the island nation sold a 10-year, $ 650 million sovereign bond at a yield of 6.125%.
Actively traded three-month forwards ended steady at 137.80/90 per dollar, little changed from Thursday’s close of 137.75/85. It gained on Thursday for the first time in nearly two weeks.
Currency dealers said the three-month forwards traded within a wide margin of between 137.50 and 137.90.
“Sentiment is positive after the bond issue,” said a currency dealer. “But whether $ 650 million is enough to ease the pressure on the rupee is yet to be seen.”
Central Bank Governor Arjuna Mahendran, however, said the pressure on the rupee is due to a strong dollar.
“The rupee is competitive. The IMF mission, which came in February, said that the rupee is fairly valued. There is no problem at all,” Mahendran told reporters in Colombo.
“It (fluctuation) is due to market forces. Don’t look at the rupee depreciation. The dollar is getting stronger against all the currencies. It is at a record level against the yen.”
Dealers said exporters may start selling dollars as inflows from the dollar bond would help boost the rupee.
Exporters have been holding dollars without converting as it has become cheaper for them to manage costs locally with rupee loans in a lower interest rate environment.
The Central Bank has allowed the spot to fall 0.75%, or by Rs. 1 since 30 April to account for broad gains in the dollar and rising credit demand in a low rate environment.
Rupee is competitive – CB Chief
Central Bank Governor Arjuna Mahendran yesterday confirmed that the rupee was competitive and fairly valued.
“There is no problem at all. Rupee depreciation is due to market forces. Do not only look at rupee depreciating against the dollar. The dollar is getting stronger against all currencies — in fact, it is at a record level against the yen,” he added.
The Governor also said that during the last IMF mission visit to Colombo at the end of February they specifically said in their press release that they considered that the rupee was fairly valued.
