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Sri Lanka rupee steady in thin trade; downward pressure expected
March 7, 2014 / 7:33 AM / 4 years ago

Sri Lanka rupee steady in thin trade; downward pressure expected

COLOMBO, March 7 (Reuters) - The Sri Lankan rupee was steady in light volume on Friday as importers mopped up dollars from inward remittances and bank sales, but dealers still expect the local currency to edge down due to seasonal demand for imports.

The spot rupee was flat at 130.55/58 per dollar at 0707 GMT. The currency has risen 0.37 percent in the last six sessions through Thursday, Thomson Reuters data showed.

Dealers said the currency could strengthen in the absence of central bank intervention before a gradual depreciation towards the end of March with seasonal importer dollar demand from the middle of the month.

“We see an unexpected appreciation in the currency since last week. Usually it tends to depreciate in March and April due to high imports for traditional new year,” an economist told Reuters on condition of anonymity.

The market has been expecting downward pressure to continue ahead of festival import demand in mid-April and due to equity outflows, though the depreciation is expected to be mild as the central bank has strong reserves to defend the rupee.

However, since Feb. 27, the rupee has been on a gaining trend amid weak demand for dollars from importers, dealers said.

The central bank said on Monday it bought a significant amount of dollars to keep the currency steady.

Foreign investors sold a net 5.41 billion rupees worth of stocks in 19 straight sessions through Thursday, but they bought a net 709 million rupees worth of government securities in the week ended Feb. 26.

The rupee has gained about 3.5 percent since it hit a record low of 135.20 on Aug. 28 last year. It lost 2.5 percent in 2013.

At 0711 GMT, Sri Lanka’s main stock index was up 0.06 percent, or 3.79 points, at 5,965.72, heading towards a more than two-week closing high. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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