COLOMBO: The Sri Lankan rupee came under pressure on importer dollar demand despite moves by the central bank to limit its fall on Monday through a combination of moral suasion and lowered forward premiums.
Two-month forwards, which were actively traded, were quoted at 134.00/20 per dollar at 0658 GMT, as all other forwards ceased trading after the central bank narrowed the per day premium, dealers said.
The central bank, which limited forward premiums at five cents per day on Friday, narrowed its limit to two cents per day, dealers said.
"The centrak bank is defending the currency strongly and there is no way people can get dollars easily," a currency dealer said on condition of anonymity. "There are no dollar sales from exporters."
Officials from the central bank were not immediately available for comment on the changes it had made to the exchange rate.
The spot currency was steady at 132.80/133.00.
The central bank lowered the spot currency trading rate to 132.80 per dollar from 132.20 on Friday amid downward pressure due to higher imports and rising private sector credit in a lower interest rate regime.
Dealers said policy uncertainty weighed on the currency as the government has sent mixed signals on investments, discouraging exporter dollar sales amid continued importer demand. They expect the pressure on the rupee to ease with some equity-related inflows.
The market had been expecting a flexible exchange rate with more foreign grants under the new government as opposed to the controlled exchange rate regime earlier.
Sri Lanka's stock market traded at a more than one-week high at 0708 GMT as investors continued to snap up beaten down blue-chips like John Keells Holdings Plc, brokers said.
The main stock index was trading up 0.46 percent, or 33.10 points higher, at 7,195.85, its highest since Jan.30.
On Feb.2, it touched its lowest level since Aug. 29, on concerns over a retrospective tax announced in the supplementary budget.
"Some trading on John Keells pushed the market up. Reasonable buying interest is continuing from Friday," said Dimantha Mathew, manager, research at First Capital Equities (pvt) Ltd.
Shares in conglomerate John Keells Holdings were up 1.9 percent.
The turnover was 635 million Sri Lankan rupees ($4.78 million), exchange data showed.
The index fell 5.1 percent in the two sessions through Feb.2 after the new government announced a budget that imposed a one-time 'super gain tax' of 25 percent on companies or individuals who made more than 2 billion rupees in profit in 2013/2014.
Comments
Comments are closed for this article.