COLOMBO, March 9 The Sri Lankan rupee ended
slightly firmer on Thursday as a state bank sold dollars amid
moral suasion by the central bank after the local currency fell
on importer greenback demand, dealers said.
Rupee forwards were active, with two-week forwards
ending at 152.20/30 per dollar after it traded at 152.35 in
intra-day trade. It closed at 152.35/50 on Wednesday.
"There was heavy moral suasion today. Some trades which
traded above 152.35 were not allowed to take place," said a
currency dealer on condition of anonymity.
"The central bank was not giving an indication of a level,
but they were saying the rates quoted were high."
Dealers said one of the state banks, which is generally used
by the central bank to direct the market, sold dollars up to
152.10 per dollar from 152.25, and eased the pressure on the
Central bank officials were not available for comment.
International Monetary Fund on Wednesday urged the country's
central bank to rebuild foreign reserves while maintaining
exchange rate flexibility.
Following its second review of a $1.5 billion three-year
loan programme, the IMF said it had discussed with Sri Lankan
authorities the need to push forward with reforms due to an
uncertain external environment.
Dealers expect the rupee to depreciate between 6 percent and
8 percent this year.
Analysts said inflow from up to $1.5 billion sovereign bond
issue sooner than later could help ease some pressure on the
Sources who know about the bond deal said top central bank
officials have already left for the United States for a road
show for the sovereign bond issue announced last month.
S&P Global Ratings said in a statement on Tuesday that it
considers exchange rate stability will remain a major priority
for Sri Lanka's policymakers and its central bank, limiting
The central bank is struggling to maintain a flexible
exchange rate in the face of heavy foreign outflows from
government securities. The rupee has depreciated 1.2 percent so
far this year, having lost 3.9 percent of its value against the
dollar last year.
Foreign investors bought a net 701 million rupees ($4.64
million) worth of government securities in the week ended March
1, recording the first weekly net inflow for the year. They have
sold a net 63.76 billion rupees of such instruments so far this
($1 = 151.2500 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry