COLOMBO: Sri Lankan rupee forwards ended slightly weaker on Wednesday due to importer dollar demand, though moral suasion from the central bank limited the fall, dealers said.
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 ended steady at 131.00/10 per dollar 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, traded a tad weaker at 131.15/25 per dollar compared with Tuesday's close of 131.12/15. Dealers said the central bank lowered the three-day forward moral suasion level by 3 cents to 131.15.
Four-day forwards, which were actively traded, were capped at 131.25 after they traded weaker at 131.35, dealers said. They ended steady at 131.25/35 per dollar.
"There was importer dollar demand and also people who had dollars were not selling," said a currency dealer asking not to be named.
Dealers said four-day forwards and premiums rose sharply earlier in the day 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.
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