Friday, 18 July 2014 00:01
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Reuters: The rupee ended weaker for a second straight day on Thursday as importer dollar demand outpaced inflows from remittances and exporters’ greenback sales, dealers said.
The rupee ended at 130.24/28 per dollar, weaker from the previous close of 130.20/22 and moving further away from Tuesday’s close of 130.18/20, its highest since 28 June 2013. “Rupee is weaker on importer dollar demand but it will start gaining next week,” on continuing inflows, said a currency dealer, asking not to be named.
Yields in Treasury bills edged down further at a weekly auction on Wednesday.
An official from the Central Bank’s international operations department told Reuters on Tuesday that the bank was buying dollars from the market to curb excess volatility as there had been continuous inflows in the last few weeks.
The official said the rupee would have appreciated to around 125 rupees per dollar levels had the central bank not intervened.
The Central Bank had absorbed $750 million from the domestic foreign exchange market this year through 14 July, he said.
Dealers said the two State banks, through which the Central Bank directs the market, bought dollars at 130.18 per dollar.
The Central Bank kept policy rates steady at multi-year lows for a sixth straight month on Monday, as expected, despite private sector credit growth slowing to a 4-1/2-year low. .
Dealers expect the rupee to face upward pressure due to slower imports and private sector credit growth.
Sri Lanka’s trade deficit narrowed by 47.9% to $393.4 million in May from $754.9 million a year earlier, mainly due to lower imports, Central Bank data showed on Monday.
