COLOMBO: Sri Lankan rupee forwards gained on Monday on dollar selling by exporters and as inward remittances outpaced importer demand for the greenback, but dealers said the local currency is under downward pressure due to rising imports in a stable exchange rate regime.
The spot rupee was not traded for a second session due to moral suasion by the central bank, dealers said.
It was quoted at 130.85/91 per dollar. It had closed at 130.85/90 per dollar on Thursday.
Three-day forwards, or spot next, were actively traded in the absence of spot trade.
The spot next was traded at 130.91/95 per dollar at 0637 GMT compared with Friday's close of 130.92/131.00. "There were some exporter dollar conversions and inward remittances," a currency dealer said.
Dealers said moral suasion by the central bank prevented the spot currency from trading below 130.85 and the market did not see the spot trade.
The market expects the local currency to face more pressure due to rising imports and lower rates, dealers said.
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 spot trade below 130.85 last week through moral suasion.
Central bank Governor Ajith Nivard Cabraal said during a Reuters post-budget forum in Colombo on Oct.27 that the trend was for an appreciating rupee.
He did not elaborate.
The central bank has been dissuading banks from trading in the spot and three-day currency forwards below different pre-determined level time to time to prevent volatility.
Overseas investors sold a net 36.2 billion rupees ($276.9 million) worth of government securities in the six weeks through Oct. 29, data from the central bank showed. Sri Lanka's stock market index was up 0.28 percent, or 20.76 points, at 7,347.57 as of 0648 GMT.
Turnover was 855.5 million rupees ($6.54 million), with 28.8 million shares changing hands.
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