Rupee at record low

Reuters: The rupee hit a new record low of 124.80 on Wednesday due to importer dollar demand ahead of the April festive season, currency dealers said, after the Central Bank kept key policy rates unchanged.  The rupee slightly recovered to close at 124.40/60 a dollar, down from Tuesday’s close of 123.30/70. Dealers said that the highest trade was done at 124.80. “The Central Bank made a wrong decision in keeping the rates steady,” said a currency dealer on condition of anonymity.

“That means heavy pressure on the exchange rate now. But we hope the rupee will recover to around 121 levels towards the end of this month on declining importer dollar demand and expected exporter conversions.”
The rupee has depreciated 8.4 per cent since the Central Bank on 9 February stopped defending a specific exchange rate. A Reuters monthly forex poll has forecast the rupee to fall as far as 128.50 by the end of August.
The Central Bank on Wednesday kept its policy rates steady, contrary to market expectations of an increase, and cut this year’s economic growth target to 7.2 per cent from eight per cent.
T-bill rates rose between 28 to 31 basis points at a weekly auction, despite the Central Bank holding policy rates firm.
The stock market meanwhile edged down as investors stayed away on negative sentiment due to slower economic growth forecasts and fears of high interest rates.
The main share index barely moved down to 5,418.07. The day’s turnover was Rs. 1.21 billion ($ 9.80 million), highest since 1 March, but below last year’s daily average of Rs. 2.3 billion. Volume was Rs. 45.4 million. Last year’s daily average was a record Rs. 102.7 million.
Foreign investors bought shares worth Rs. 71 million, extending the offshore net foreign inflow to Rs. 3.13 billion so far this year, after a net outflow of Rs. 19.1 billion last year.
The Colombo Bourse is one of the worst performers this year among Asian markets, with a 10.8 per cent loss.