COLOMBO: Sri Lankan rupee forwards traded weaker for a fifth straight session on Thursday on importer dollar demand while exporters stayed on the sidelines on fears of possible depreciation, though the central bank capped the fall, dealers said.
Actively traded four-day forwards fell 0.23 percent to 133.25 before the central bank prevented a further decline via moral suasion. The four-day forwards were traded at 132.95/133.20 per dollar by 0837 GMT, compared with Wednesday's close of 132.95/133.05.
Dealers expect the rupee to depreciate to 135 in the near future, either due to a policy decision in the budget or if the central bank allows it to fall gradually by stopping intervention.
Exporters are waiting for clarity on economic policy from President Maithripala Sirisena's new government ahead of a scheduled interim budget on Jan. 29, dealers said.
Sirisena, who announced an interim cabinet on Jan. 12, said he would carry out reforms to fight corruption in the 100 days to a parliamentary election.
The market is expecting a flexible exchange rate with more foreign grants under the new government as opposed to the controlled exchange rate regime earlier.
The spot currency was not traded on Thursday.
The main stock index fell 1.37 percent in thin volume trade a day after the government reappointed Thilak Karunaratne head of the market regulator and said he was to investigate suspected corrupt deals.
The index, however, recovered after top conglomerate John Keells Holdings, which lost 3.23 percent in early trade, recouped its losses. The market was down 0.01 percent at 0854 GMT.
"There was some panic selling with the uncertainty - not only the political uncertainty but the uncertainty after the change of the SEC Chairman," said Dimantha Mathew manager, research at First Capital Equities (pvt) Ltd.
"Most of the uncertainty will be settled after the budget next week," Karunaratne told Reuters, adding he would not be "on a witch hunt", while the investigations into alleged corrupt deals would go through.
The index has fallen 4.87 percent in the past six sessions on political uncertainty.
Turnover was 1.19 billion rupees ($9.04 million) by 0905 GMT, exchange data showed.
Comments
Comments are closed for this article.