Rupee edges down on mild importer dollar demand

Reuters: The rupee closed slightly weaker on Wednesday on light importer dollar demand in the absence of export dollar conversions and inflows from remittances after a long holiday, dealers said.
Both currency and stock markets were closed on Monday and Tuesday for the Sinhala-Tamil New Year holiday and a special bank holiday respectively.
The spot rupee ended at 130.60/65 per dollar, edging down from Friday’s close of 130.59/61.
The rupee has been hovering between 130.55 and 130.70 per dollar since 3 March, Thomson Reuters data showed, and currency dealers cited the Central Bank’s intervention through two State banks in both directions.
Last week, the Central Bank’s International Operations Department said the bank had bought dollars to smoothen the volatility and will continue to buy “excess dollars after State banks’ buying for oil and other imports”.
Since mid-March, the market saw a gradual increase in remittances by Sri Lankan expatriates to their relatives, while dollar selling also rose as exporters paid bonuses to their employees ahead of the festival.
Central Bank Governor Ajith Nivard Cabraal said on Wednesday at a Reuters’ Global Market Forum that a sharp depreciation or appreciation was unlikely in the rupee “although a gentle trend could perhaps take place”.
The Central Bank’s moral suasion has largely helped to keep the rupee steady when the currency faced excess volatility due to both upward and downward pressures.
Depreciation pressure in the early part of this year has eased due to inflows from remittances and exporter dollar conversion ahead of the Sinhala-Tamil New Year.
Dealers, however, said the rupee could come under downward pressure again in the event of imports picking up in a lower interest rate regime.