COLOMBO: Sri Lankan rupee forwards ended steady on Monday as the central bank prevented any fall in the currency against the dollar via moral suasion despite downward pressures, having already allowed some depreciation earlier during the month.
Actively traded three-month forwards ended steady at 136.55/70 per dollar.
"There is no offer in the market and nobody is chasing dollar purchase because of the central bank's moral suasion," a currency dealer said on condition of anonymity.
"All the forwards are fixed by the central bank and if anybody wants dollars, they have to buy it at the level the central bank decides."
Two-month forwards were unchanged at 135.50/80 per dollar and the one-month was steady at 134.70/90.
Central bank officials were not available for comment.
Dealers said the currency would be under pressure until either dollar inflows pick up or interest rates rise.
However, Finance Minister Ravi Karunanayake said on Monday there was no pressure on the rupee and foreign currency reserves had risen to $7.8 billion as of Monday.
The reserves were estimated to have increased to $7.4 billion by April 30, the central bank has said.
In its monetary policy for May, the central bank, while holding policy rates at record lows, said the rupee had depreciated against the dollar by around 2 percent so far this year.
The central bank has already allowed the spot rupee to fall 0.6 percent, or by 80 cents, to 133.70 since April 30 to account for broad gains in the greenback and rising credit demand in a low interest rate environment.
However, dealers say the depreciation was not adequate and the market had adjusted to trade forwards after the central bank was seen defending the currency.
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