Rupee rebounds; Bourse dips

Reuters: The rupee edged up on Wednesday from its lowest close in nearly six months due to profit-booking by exporters and banks after the local currency fell almost 1% in the previous session on bond sales by foreign investors.

The rupee ended at 127.45/50 per dollar compared with Tuesday’s close of 127.75/85, its lowest close since 19 December.



The rupee fell 0.96% on Tuesday as some small-time bondholders pulled back on a possible fall in Sri Lanka’s market interest rates and on US Treasury yields moving upward. Importers also bought dollars on fears over a further depreciation.

“Exporters booked profits and there was no importer demand for dollars,” a currency dealer said.

Some analysts said more foreign bondholders could exit in the near future and the rupee could slide to as low as 128.00.

The Central Bank Governor, after holding key policy rates steady on Friday, said the monetary authority would issue guidelines to direct banks to cut lending rates and narrow the gap with the inflation rate.

Sri Lanka’s main stock index edged down in thin trade with foreigners selling shares on a net basis. It fell 0.3%, or 19.03 points, to 6,284.76, its lowest close since 16 May.

Analysts said local investors were worried over possible pull out by foreign investors like in other Asian markets amid the rise in US treasury yields.

Asian shares hit fresh 2013 lows and Japanese stocks had another volatile session on Wednesday, extending a broad rout in global equities as lingering fears of a softening of US stimulus unnerved investors.

Foreigners were net sellers of shares for the first time in the last 24 sessions and the Bourse saw a net foreign outflow of Rs. 102.6 million ($ 803,400). But they have been net buyers of Rs. 16.07 billion worth shares so far this year.

The day’s turnover was Rs. 566.3 million, the lowest since 28 May and well below this year’s daily average of Rs. 1.04 billion.