Rupee hits record low and recovers

Reuters: The rupee hit a record low on Thursday on importer demand for the US currency, but a State bank intervention helped the local unit to recover, dealers said.

The rupee hit a new low of 134.30 to the dollar, surpassing its previous low of 134.10 hit on Wednesday.

“The highest deal was done at 134.30 on light trade due to importer dollar demand. But it eased after the state bank started selling dollars around the 133 level,” a currency dealer said on condition of anonymity.  Two other dealers confirmed the move.

The rupee closed at 133.80/90 to the dollar, a tad firmer from Wednesday’s close of 133.90/134.00. It has fallen 1.75 per cent since 18 June.Analysts expect the rupee to stabilise and to reach 128 by end of the year, provided the central bank tightens monetary policy further.

Rupee...

The Central Bank has already raised rates twice since February and curbed credit growth to reduce demand for dollars in the market.

The rupee has lost 17.8 per cent of its value since November, when the Government allowed a three per cent devaluation.

The Colombo Stock Exchange’s main index lost 0.8 per cent or 39.78 points to 4,955.91, its lowest since 14 June.

Turnover was Rs. 797.2 million ($ 5.96 million), below this year’s daily average turnover of Rs. 988.4 million.

Foreign investors were net sellers of Rs. 199.6 million worth of shares on Thursday, but they have been net buyers of Rs. 23.13 billion so far this year.