Rupee up 1.2%

Reuters: The rupee closed 1.2 per cent firmer on Thursday as foreign investors bought into local bonds while exporters and residents receiving remittances from workers abroad sold dollars ahead of festivals in April to mark the local New Year.

The rupee strengthened to 127.60/127.80 per dollar from Wednesday’s close of 129.20/129.30. The currency has recovered 3.05 per cent since it hit a record low of 131.60 on 19 March. Dealers see the rupee extending gains now that demand for imported commodities ahead of the festival season is easing. On Thursday, the Central Bank said it might stop supplying dollars to pay for oil import bills from May, its latest move to allow more rupee flexibility after it refrained from intervening in foreign exchange markets last month.                      

The rupee has fallen 10.5 per cent since the Central Bank stopped defending the currency on 9 February.

The stock market inched down on Thursday to a one-week low as investors were cautious about buying risky assets due to concerns over rising interest rates, the rupee’s volatility and an expected fall in corporate profits.

The nation’s main share index was 0.08 per cent to 5,412.04, lowest since 22 March.

The day’s turnover was Rs. 1.19 billion ($ 9.21 million), mainly due to a number of block deals, but it was still less than this year’s daily average of 1.37 billion.

Foreign investors were net sellers of 41.9 million on Thursday. But they have been net buyers of Rs. 20.1 billion ($ 155.57 million) worth of shares so far this year, after a net outflow of 19.1 billion last year.

The Colombo Bourse is one of the worst performers this year among Asian markets, with a 10.9 per cent loss.