COLOMBO: Sri Lankan rupee one-week forwards ended slightly firmer on Thursday amid dollar demand by importers and foreign investors, even as the central bank cut the dollar selling rate for the spot currency, dealers said.
The central bank reduced the spot rupee's peg to 144.50 per dollar, from 144.75 in the previous session, although the spot rupee was not traded for a third straight session on Thursday, dealers said.
On Monday, the spot closed at 144.85/95 per dollar.
The spot rupee has been pegged down from 145.75 levels in early June after the local currency rose sharply following increased dollar conversions by exporters and overseas funds.
"Foreign buying in local bonds has been slow this week. I think foreign investors see the rupee has been overvalued at these levels," a currency dealer who deals with foreign bond buyers told Reuters.
One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards on Thursday, closed at 145.35/60 per dollar compared with Wednesday's close of 145.50/60.
Dealers said the central bank was intervening in the market to keep the rupee up. Central bank officials were however not available for comment.
"The exporter conversions we saw last few days has reduced and the demand (for dollars) is there," another currency dealer said, asking not to be named.
The foreign exchange market also shrugged off improved quarterly growth data as the growth was not driven by exports, dealers said.
Sri Lanka's first-quarter growth rose to 5.5 percent year-on-year, more than double the growth recorded in the previous quarter, helped by a recovery in the construction sector, data from the state-run statistics department showed on Wednesday.
Three-day dollar/rupee forwards, known as spot next, did not actively trade on Thursday. They closed at 144.85/90 per dollar on Wednesday, compared with Tuesday's close of 144.90/145.10.
Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.
For Thursday's trade, the spot next settlement takes place five days ahead due to the intervening weekend.
Foreign investors net bought 8.47 billion rupees ($58.53 million) worth of government bonds in the week ended June 8, central bank data showed.
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