Rupee rises 0.8% on exporter dollar selling

Friday, 4 May 2012 00:01 - - {{hitsCtrl.values.hits}}

Bourse at 6-week low

Reuters: The rupee ended 0.8 per cent firmer on Thursday as exporters converted dollars, fearing the local currency could appreciate heavily after a warning by the Treasury Secretary.

The rupee ended at 126.90/127.00 against the dollar, up from Wednesday’s close of 127.70/128.20.

The currency has gained 2.6 per cent in the last two sessions since the Treasury Secretary warned of resume market intervention if the currency dropped beyond “tolerable” levels.

Rupee...

“The market expects the rupee to appreciate further because of expected inflows,” a dealer said.

Treasury Secretary P.B. Jayasundera on Monday said the currency should stabilise below Rs. 125 and there was no fundamental reason for it to weaken beyond that level.

The currency hit an all-time low of 133.50 on 25 April, but has since rebounded by 5.15 per cent.

Still, it is down 9.96 per cent since the Central Bank stopped intervening to defend a specific price level on 9 February. It has depreciated 13 per cent since 19 November, when the Government allowed a three per cent devaluation.

The stock market fell below a support level of 5,400 points, losing 0.51 per cent, or 27.70 points, to 5,389.47 with investors worried about the rupee’s volatility, rising interest rates and slowing economic growth.

The day’s turnover was Rs. 470.2 million ($ 3.67 million), well below this year’s daily average of Rs. 1.2 billion.

The market saw a foreign inflow of Rs. 103.9 million extending the net foreign inflow so far this year to Rs. 21.4 billion.

The Colombo Bourse is one of the worst performing Asian markets this year, losing 11.28 per cent so far.