COLOMBO: Sri Lankan rupee forwards rose for the first time in nearly two weeks as exporters converted some dollars after the island nation launched a 10-year dollar bond in the international market, dealers said.
Sri Lanka is marketing the 10-year US dollar bond to yield around 6.375 percent, after it announced a plan to raise up to $1.5 billion from sovereign bonds early this year. The delay has put pressure on the rupee.
Actively traded three-month forwards were at 137.60/90 per dollar at 0852 GMT, compared with Wednesday's close of 139.00/10, gaining for the first time since May 15.
"Exporters seen selling dollars after the news of the sovereign bond sale," a currency dealer said.
Dealers said exporters may start selling dollars as inflows from the dollar bond would help boost the rupee currency.
Exporters have been holding dollars without converting as it has become cheaper for them to manage costs locally with rupee loans in a lower interest rate environment.
Dealers said the proceedings from the dollar bond would help ease pressure on the currency in the short run, but the $75 billion economy may need sustainable dollar inflows to prevent the rupee from falling and a potential balance of payments crisis.
The central bank on Tuesday allowed the spot rupee to fall 0.15 percent or 20 cents to 133.90, near its record low of 134.10, hit on June 28, 2012, Thomson Reuters data showed.
Currency dealers said with the three-month forwards trading around 137.60, the implied spot rupee should be around 136.00 per dollar. But the central bank has kept the spot at 133.90.
The central bank has allowed the spot to fall 0.75 percent, or by 1 rupee since April 30 to account for broad gains in the dollar and rising credit demand in a low rate environment.
A central bank official on condition of anonymity told Reuters on Tuesday that the banking sector regulator only intervenes in the spot market and never fixes prices on the forwards.
In the stock market, the benchmark index traded 0.11 percent firmer at 7,261.38 of 0902 GMT. Turnover stood at 1.38 billion rupees ($10.31 million).
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