COLOMBO: Sri Lankan rupee forwards traded steady on Wednesday despite importer dollar demand due to moral suasion from the central bank, dealers said.
However, the local currency was under pressure as imports continue to rise in a stable exchange rate regime and a low interest rate environment, they said.
The rupee will likely remain weak due to rising seasonal imports, at least through November and then start to inch up in December on remittances, they added.
The spot currency was steady at 131.00/10 per dollar at 06.34 GMT compared with Tuesday's close. Dealers said the central bank defended the local currency at 131.00. Central bank officials were not immediately available for comments.
Three-day forwards, or spot-next, which were capped at 131.12, traded steady at 131.12/15 per dollar compared with Tuesday's close. Four-day forwards, which were actively traded, were capped at 131.25 after they traded stronger at 131.35, dealers said. They were trading steady at 131.25/35 per dollar.
"There is importer dollar demand and also people who have dollars are not selling," said a currency dealer asking not to be named. Dealers said four-day forwards and premiums rose sharply due to the restriction in dealing with spot by the central bank through moral suasion.
Overseas investors sold a net 39.54 billion rupees ($302 million) worth of government securities in the eight weeks through Nov. 12, data from the central bank showed.
Sri Lanka's stock index was up 0.07 percent, or 4.95 points, at 7,553.18 at 0642 GMT, heading for its seventh straight day of gain.
Turnover was 1.11 billion rupees ($8.47 million), with 93 million shares changing hands.
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