COLOMBO: The Sri Lankan rupee traded a tad firmer on Thursday due to inflows from remittances and exporter dollar sales after the central bank prevented the local currency from falling below 131.00, dealers said.
The spot currency was quoted at 130.85/90 per dollar at 0828 GMT compared to Wednesday's close of 130.80/131.00. It was largely untraded last week on moral suasion by the central bank.
Dealers said three-day forward or spot next was actively traded in the absence of spot trade. Spot next was traded at 130.85/95 per dollar compared to Wednesday's close of 130.95/131.05.
"Exporters were selling dollars in the market after waiting for a long time. I think they would have realised the central bank is not going to allow the rupee to trade below 131.00 level," a currency dealer said, asking not to be named.
Dealers said the market expects the local currency to face more pressure due to rising imports and lower rates. The central bank's stable exchange rate policy would encourage more imports in the medium term, they said.
The central bank has been preventing any rupee spot trade below 130.85 this week through moral suasion, dealers said.
Sri Lanka's central bank governor Ajith Nivard Cabraal said during a Reuters post-budget forum in Colombo on Monday that the trend was for an appreciating rupee. He did not elaborate.
The central bank had last week dissuaded some banks from trading in the spot and three-day currency forwards below a pre-determined level to prevent volatility.
Sri Lanka's stock market index was up 0.48 percent, or 34.61 points, at 7,300.51 as of 0834 GMT.
Turnover was 1.88 billion rupees ($14.37 million), with 90.3 million shares changing hands.
Comments
Comments are closed for this article.