COLOMBO: The Sri Lankan rupee traded steady on Thursday as the central bank prevented any fall amid importer dollar demand and lack of exporter dollar conversions, while the market expects downward pressure to persist until inflows come in, dealers said.
The spot currency traded steady at 132.80/133.00 per dollar at 0511 GMT. On Friday, the central bank lowered the spot rate to 132.80 from 132.60 amid depreciation pressure.
Finance Minister Ravi Karunanayake on Monday said the rupee will be held steady at current levels and "there won't be any devaluation at all".
"Banks are plus in dollars, but they are not willing to sell them," a currency dealer said on condition of anonymity. "Everybody expects the rupee to depreciate. So nobody including exporters are selling dollars. This trend will continue until the country gets huge inflows.
Karunanayake on Monday told Reuters that Sri Lanka would sell up to $1.5 billion sovereign bonds in the international market soon and expects to tap maximum possible borrowing from the International Monetary Fund (IMF).
Already a central bank team lead by Central Bank Governor Arjuna Mahendran is in Washington to discuss with IMF, government sources told Reuters.
One-month forwards traded at the administered rate of 133.44 per dollar, while most of the other forwards ceased trading for the fourth straight session after the central bank narrowed the per day premium to 2 cents on Monday from Friday's 5 cents, dealers said.
Some dealers said exporters might convert dollars, which might help ease the pressure if the central bank held the rupee at these levels for the next few days.
The rupee is under 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 had sent mixed signals on investment, discouraging exporter dollar sales amid continued importer demand. They expect the pressure on the rupee to ease with some equity-related inflows.
The main stock index traded 0.37 percent, or 26.94 points weaker, at 7,332.47 at 0520 GMT, slipping from its highest since Jan. 29 hit on Wednesday.
The turnover was 283.9 million Sri Lankan rupees ($2.14 million), exchange data showed.
Comments
Comments are closed for this article.