Rupee up on Govt. bond dollar inflows; Stock market fails to cheer

The rupee strengthened on Wednesday, a day after the country sold a $ 1 billion, 10-year euro bond, raising hopes the rupee could reverse its trend of depreciation, dealers said whilst Bourse failed to cheer up.

The rupee closed at 133.50/65 against the dollar, firmer than Tuesday’s close of 133.85/90.

“There were huge inflows into Government bonds,” said a currency dealer. “With the euro bond, the rupee should further strengthen and stabilise.”

Sri Lanka’s latest bond was priced at 5.875 per cent and was more than 10 times oversubscribed when the order book closed on Tuesday.

Lack of dollar liquidity in the market has dragged down the rupee since the Central Bank allowed flexibility in the rupee exchange rate on 9 February. The currency has fallen 14.6 per cent since then.

The Colombo Stock Exchange’s main index meanwhile fell 0.63 per cent or 30.39 points to 4,822.64, its lowest since 12 June.

Turnover was Rs. 383.4 million ($ 2.86 million), well below this year’s daily average of Rs. 921.9 million.

Treasury bill rates rose 2-6 basis points on Wednesday, leaving the 364-day Treasury bill at a three-year high of 13.16 per cent.