Rupee forwards up; spot trading resumes

Reuters: Rupee forwards ended firmer on Monday as the spot currency started to trade after the island nation raised nearly $1 billion from Bond sales in the previous week, with the local currency seen holding steady amid further expected inflows.
Sri Lanka raised $650 million on Thursday by selling an International Sovereign Bond at a yield of 6.125 percent and $388 million from development bonds.
The spot rupee started trading as a State bank, through which the Central Bank usually directs the market, sold dollars at 133.90 per dollar, dealers said.
“There were dollars for trade-related transactions, but not for speculative trading,” a dealer said asking not to be named.
He said the pressure on the rupee might ease when expected inflows come in.
Three-month forwards, which were actively traded for the last few weeks in the absence of spot trading, closed at 136.80/137.10, firmer from Friday’s close of 137.80/90.
Finance Minister Ravi Karunanayake on Friday said the country would see further inflow from some international banks, while Central Bank Governor Arjuna Mahendran said the depreciation pressure was due to a stronger dollar.
Dealers said exporters may start selling dollars as inflows from the dollar bond would help boost the rupee.
The Central Bank, with effect from Monday, imposed a 5% penalty on exporters who hold their dollars for more than 90 days, and a monthly 2% thereafter, currency dealers said.
Exporters have been holding dollars without converting them 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 Re. 1, since 30 April to account for broad gains in the dollar and rising credit demand in a low rate environment.
Both stock and currency markets will be closed for a Buddhist religious holiday on Tuesday. The markets will resume trading on Wednesday.