Rupee trades at near record low

11 September 2015 06:47 am

REUTERS: The Sri Lankan rupee traded near its all-time low yesterday and was on track for a fifth straight decline as demand for dollars by importers outpaced selling of the greenback by exporters, dealers said.
The rupee is expected to fall further if the Central Bank fails to tighten interest rates or if the country does not see strong inflows, some dealers said.
The Central Bank rejected all the bids in a weekly t-bill auction on Wednesday, an indication of dealers bidding at higher yields than the Central Bank’s expectations, traders said. Results of the last week t-bill auction showed t-bill yields gaining between 20 and 26 basis points, with benchmark 91-day t-bill yields hitting a more-than five-month high of 6.79 percent.

The spot rupee was trading at 138.90/139.00 per dollar compared to Wednesday’s close of 138.80/95. It hit a record low of 139.00 per dollar on Friday.
“There is a lot of pressure on the rupee due to importers. Exporters are not selling, and waiting to see if the rupee would fall beyond 139.00,” a currency dealer said on condition of anonymity.

Another dealer said some foreign investors sold government securities, leading to outflows.
State-run banks, through which the Central Bank directs the market, did not sell dollars or give a reference rate for the currency as in the past, dealers said, adding they were reluctant to trade the currency below the 139.00 level, which is seen as the central bank’s desired level.
The rupee fell 3 percent on Friday to a record low of 139.00 per dollar after the Central Bank effectively floated the currency by ceasing to quote its own reference rate.