COLOMBO: Sri Lankan five-day rupee forwards edged lower despite a state-run bank selling dollars to offset greenback demand from importers, while investors awaited clarity on key policy rates, dealers said.
The central bank is expected to keep rates steady at its April monetary policy announcement later in the day, a Reuters poll showed, but a surprise hike is not ruled out.
Five out of 11 analysts expect the central bank to raise rates to keep government borrowing in check through tighter financing conditions.
"The rupee ended weaker as the demand (for dollars) was there. But a state bank sold (dollars) at 145.70 to select trades," said a currency dealer requesting not to be named.
The five-day forwards, which are known as spot next and act as a proxy for the spot currency, ended at 146.50/70, compared with Monday's close of 146.40/60.
Dealers were also analysing the impact of Finance Minister Ravi Karunanayake's move after he asked exporters last week to repatriate their earnings received on or after April 1 to improve foreign exchange inflows.
Central bank Governor Arjuna Mahendran said on April 12 the monetary authority has been intervening to smoothen volatility in an illiquid market.
The spot rupee, which has barely seen any trading since Jan. 27, was not actively traded on Tuesday.
The rupee has been under pressure as foreign investors have sold government securities amid Sri Lanka's economic woes, but have net bought bonds worth 11.7 billion rupees ($79.92 million) in the last four weeks till April 20, central bank data showed.
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