Sri Lankan rupee steady as late importer dollar demand offsets inward remittances

COLOMBO: The Sri Lankan rupee ended steady on Thursday as importer dollar demand in late trades offset inward remittances and selling of the greenback by exporters, dealers said.

Rupee forwards were active, with two-week forwards closing unchanged at 152.55/65 per dollar.

"Still we see importer demand. But the pressure on the rupee will ease with remittances and exporter dollar sales in the coming weeks ahead of the traditional new year in April," said a currency dealer who did not wish to be named.

Dealers said the rupee has been under pressure due to dollar demand to meet increased seasonal imports ahead of the traditional new year that is celebrated on April 13-14.

The central bank on Monday raised the spot rupee reference rate by 10 cents to 151.70. It had raised the reference rate by 25 cents on March 20.

On Friday, the central bank raised interest rates for the first time in eight months, saying tighter policy was a precaution against a build-up of inflationary pressures.

Analysts said the rate hike, a move that was also aimed at easing pressure on the rupee, could help stabilise the domestic currency that has been hurt by rising imports and outflows due to rupee bond sales by foreign investors.

Foreign investors net bought government securities worth 70 million rupees ($461,285) in the week ended March 22, but they have net sold 63.2 billion rupees of such instruments so far this year.