COLOMBO: The Sri Lankan rupee ended steady on Monday for the sixth straight session as the central bank defended the currency, which has been under pressure due to tepid dollar demand from importers, dealers said.
Pressure on the currency is expected to persist despite the central bank's actions until inflows start to come in, they said.
Sri Lanka's newly elected government has said it would borrow up to $1.5 billion through sovereign bonds and $4 billion from the International Monetary Fund (IMF) to restructure expensive loans. The spot currency ended at 132.80/133.00 per dollar, unchanged from Friday's close.
"Central bank offered dollars at 132.80 for some banks," said a currency dealer asking not to be named. "The market was dull with holidays in-between." The stock and currency markets will be closed on Tuesday for a Hindu religious holiday.
Normal trading will resume on Wednesday. The central bank has been defending the spot currency's level at 132.80 since Feb. 6, after it lowered the spot rate to 132.80 from 132.20 amid depreciation pressure.
A central bank official was not immediately available for comment.
Dealers said trading in most forwards was thin after the central bank narrowed the per day premium to 2 cents on Feb. 9 from 5 cents.
Finance Minister Ravi Karunanayake said on Feb. 9 that the rupee would be held steady at current levels and "there won't be any devaluation at all".
Karunanayake told Reuters that Sri Lanka would sell up to $1.5 billion of sovereign bonds in the international market soon and expects to tap the maximum possible borrowing from IMF.
A top government official said on Thursday, on condition of anonymity, that the government is looking to borrow $4 billion from IMF at very cheap rates for balance of payments support.
A central bank team led by Governor Arjuna Mahendran is in Washington for discussions with the IMF.
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