COLOMBO: Sri Lanka's rupee forwards traded weaker on Wednesday due to importer dollar demand amid outflows from foreign sales in government securities, dealers said, a day after the central bank allowed the spot currency to fall by 0.15 percent.
Dealers said lack of greenback conversions by exporters, who are managing their costs locally with cheaper rupee loans in a lower interest rate environment, was weighing on the currency.
Actively traded three-month forwards were at 137.50/80 per dollar at 0750 GMT, compared with Tuesday's close of 137.10/40.
"If the central bank does not get inflows soon, there will be a huge pressure on the rupee. Interest rates are too low and foreigners will see more opportunity to sell their bonds and exit," a currency dealer said on condition of anonymity.
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.
Some dealers said the depreciation was not adequate and the market had adjusted to trade forwards after the central bank was seen preventing the currency from falling sharply.
"With the three-month forwards trading around 137.50, the implied spot rupee should be around 135.75 per dollar. But the central bank is not allowing to depreciate it below 133.90," the dealer said.
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.
Two-month forwards were unchanged at 135.50/80 per dollar and one-month forwards were steady at 134.70/90, as the central bank prevented the currency from falling, dealers said.
However, a central bank official on condition of anonymity told Reuters on Tuesday that the bank 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 7,269.93 as of 0757 GMT. Turnover stood at 970.1 million rupees ($7.24 million).
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