Rupee 1-wk forwards fall on importer dollar demand; Brexit weighs

REUTERS- Sri Lankan rupee one-week forwards fell yesterday as it faced pressure from a strengthening dollar after Britons voted to leave the European Union, cautioning importers, but selling of the U.S. currency by a state bank capped losses, dealers said.
Britain voted to leave the 28-member bloc, results from Thursday’s referendum showed, a stunning repudiation of the nation’s elites that deals the biggest blow to the European project of greater unity since World War Two. 

The sterling plunged on the vote to leave and equities were hammered across the 
world yesterday as turmoil swept through 
global markets.

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards, were trading at 147.70/90 per dollar at 0654 GMT, weaker from Thursday’s close of 147.10/30.

t hit a low of 148.10 per dollar in early trade. Dealers said one of the two state-run banks sold dollars at Rs.148.00, before selling it at Rs.147.90. 
The Central Bank usually directs the market via two state-run banks. Central bank officials were not available for comment.

    “The rupee is under pressure. The importer demand is there as the importers rushed in with the Brexit results,” said a currency dealer asking not to be named.
“With the Brexit, risk profile of countries like Sri Lanka will rise, and also, we will have to negotiate afresh trade preferences and other trade-related activities which might impact our exports apart from other global risks. Already the Indian rupee is reacting to it,” the dealer said.
     Shiran Fernando, an analyst at Colombo-based Frontier Research, said Brexit will push investors to go back to safe haven assets as the U.S. currency is strengthening.