COLOMBO Oct 7 The Sri Lankan rupee fell on
Friday due to importer dollar demand while moral suasion by the
central bank on the spot-currency trade forced banks to deal in
spot-next, dealers said.
"Banks did not trade the spot rupee below 146.85 because of
moral suasion," a currency dealer said, requesting anonymity.
"We see a state bank selling dollars for spot rupee at 146.90
and then at 146.85 for selective buyers."
Officials at the central bank were not available for
The spot rupee was quoted at 146.85 per dollar, but
there was hardly any trade, dealers said. It closed at 146.88/95
Rupee forwards were active, and the spot-next closed
146.95/147.05, compared with the previous day's close of
146.90/97, dealers said.
The market expects the local currency to be under pressure
due to seasonal demand from importers until the year-end.
Dealers say foreign buying into government securities has
slowed with the fall in interest rates while the central bank
has been buying dollars from the market to accumulate reserves
to meet the targets set by the International Monetary Fund under
a $1.5 billion loan deal.
The central bank has been under pressure from the (IMF) to
continue rebuilding international reserves and maintain exchange
rate flexibility to develop the foreign exchange market further.
Usually the central bank intervenes whenever there is
The rupee has been under pressure due to importer dollar
demand, posting a 0.65 percent decline last week.
Finance Minister Ravi Karunanayake said on Monday the
government wanted a strong currency through higher foreign
inflows and without interventions.
(Reporting by Shihar Aneez; Editing by Sherry Jacob-Phillips)