COLOMBO: Sri Lankan rupee forwards fell slightly on Friday due to importer dollar demand, but moral suasion by the central bank prevented them from falling below 131.00, dealers said.
The spot currency was not quoted due to moral suasion, dealers said. It closed at 130.85/90 per dollar on Thursday.
Three-day forwards, or spot next, were actively traded in the absence of spot trade. Spot next was traded at 131.00/05 per dollar compared with Thursday's close of 130.90/131.00.
"There is importer dollar demand and the spot is not trading due to moral suasion. Even spot next is not allowed to trade below 131.00," a currency dealer said.
Dealers said the market expects the local currency to face more pressure due to rising imports and lower rates. The central bank's stable exchange rate policy would encourage more imports in the medium term, they said.
The central bank has been preventing any rupee spot trade below 130.85 this week through moral suasion, dealers said.
Central bank Governor Ajith Nivard Cabraal said during a Reuters post-budget forum in Colombo on Monday that the trend was for an appreciating rupee. He did not elaborate.
The central bank had last week dissuaded some banks from trading in the spot and three-day currency forwards below a pre-determined level to prevent volatility.
Sri Lanka's stock market index was up 0.53 percent, or 38.87 points, at 7,333.28 as of 0652 GMT.
Turnover was 855.1 million rupees ($6.53 million), with 42.4 million shares changing hands.
Comments
Comments are closed for this article.