COLOMBO: The Sri Lankan rupee ended firmer on Tuesday as dollar conversions by exporters and banks outpaced importer demand for the greenback even as hopes rose the rupee would rise slightly after the IMF approved a $1.5 billion loan, dealers said.
The IMF executive board approved the three-year loan over the weekend, targeting reforms aimed at boosting government revenues to reduce the fiscal deficit, improving foreign exchange reserves and reducing public debt.
The global lender said the transition to flexible inflation targeting under a flexible exchange rate regime was one of the pillars of the loan programme.
The dollar/rupee forwards, known as spot next, ended at 145.75/85 per dollar, firmer from Monday's close of 146.00/25.
The spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is three days ahead for Tuesday's trade. The spot currency did not trade on Tuesday.
"A state bank started selling dollars at 145.75 and with that we saw other banks also started selling in the latter part of the day. Importers are waiting, thinking the rupee would strengthen further," a currency dealer said.
Two state-run banks, through which the central bank usually directs the market, sometimes sell dollars to curb falls in the rupee. Central bank officials were not available for comment on whether it had intervened.
Dealers said they expect the rupee to rise slightly due to expected inflows, including from sovereign bonds and bilateral loans.
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