COLOMBO: Sri Lankan rupee forwards traded firmer on Wednesday as inflows from strong remittances and exporter dollar sales outpaced thin importer demand for the greenback, dealers said.
Actively traded one-week forwards were at 133.15/20 per dollar, compared with Tuesday's close of 133.20/25. Two-week forwards were at 133.25/35 per dollar, compared with their previous close of 133.30/40.
Two-week forwards have gained 0.56 percent while the one-week forwards have risen 0.34 percent since March 19.
"There are not much import bills; we have seen some oil bills but (dollar) inflows to rupee bonds as well as seasonal inflows are continuing," said a currency dealer on condition of anonymity.
People are converting dollars into rupees ahead of public holidays on April 13 and 14, dealers said, adding the local currency was expected to gain on higher seasonal inward remittances ahead of the Sinhala-Tamil New Year on April 14.
The central bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February.
Central bank officials were not available for comment.
Sri Lanka's government borrowing has risen sharply since January, central bank data showed on Monday, as the new government has sharply increased state sector wages and lowered duties on key commodities.
The increased borrowing has put pressure on government finances and pushed up yields on Treasury bills by between 76 and 82 basis points (bps) since Jan. 7.
Sri Lanka's parliament however rejected a plan Tuesday to increase government borrowing limits by 400 billion rupees after public spending surged in the run-up to parliamentary elections scheduled to be held after April 23.
The main stock index was 0.06 percent weaker at 6,923.34 at 0530 GMT.
Turnover stood at 121.4 million rupees ($914,157). Investors are expected to cautious until the political situation stabilises, stockbrokers said
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