COLOMBO: Sri Lankan rupee forwards ended slightly weaker on Monday due to importer dollar demand, though the central bank's moral suasion capped the fall, dealers said.
The market expects the downward pressure on the currency to remain due to lower interest rates and rising importer dollar demand, dealers said.
Actively traded two-month forwards ended at 135.65/75 per dollar weaker from Friday's close of 135.55/60. One-month forwards were also steady at 134.70/90 per dollar as the central bank defended their levels through moral suasion, dealers said.
"Importers' demand is putting pressure on the rupee. The moral suasion is holding the rupee and it will be under pressure due to rise in imports in a lower interest rate regime," said a currency dealer who did not want to be named.
However, Finance Minister Ravi Karunanayake rejected the claim of downward pressure on the currency.
"We don't see any pressure. There is usual administration of the rupee. We don't manipulate it now," Karunanayake told reporters in Colombo.
The central bank said in a statement on Friday that the rupee had depreciated 1.5 percent against the U.S. dollar through May 5.
On Wednesday, the central bank allowed a 30 cent, or 0.23 percent, fall in the spot rupee to 133.30 per dollar, followed by a 10-cent cut to 133.00 on April 30, until when the spot currency was held at 132.90 since February.
Dealers said the spot rupee did not trade on Monday as well due to moral suasion by the central bank.
The central bank has been keeping the spot rupee and all forwards up to two-month steady through moral suasion. Central bank officials were not available for comment.
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