COLOMBO, March 13 The Sri Lankan rupee weakened
on Monday due to importer dollar demand, with the market
awaiting inflows from sovereign and development bonds to see if
the local currency would reverse its falling trend, dealers
Rupee forwards were active, with two-week forwards
ending at 152.50/70 per dollar, compared with Friday's close of
"There was demand (for dollars) from some foreign banks,
maybe for imports and some dividend payment," said a currency
dealer, asking not to be named.
Another dealer said the market was volatile in the past as
the central bank did not intervene as it used to earlier.
Lack of central bank intervention in the market comes after
the country missed the end-December net internal reserves target
set by the International Monetary Fund for a $1.5 billion loan
approved last year.
The IMF on Wednesday urged the central bank to rebuild
foreign reserves while maintaining exchange rate flexibility.
Dealers said the market is awaiting dollar inflows from a
$1.5 billion sovereign bond and a Sri Lanka Development Bond
auction scheduled for Tuesday in which the government expects to
raise $830 million.
Dealers expect the rupee to depreciate between 6 percent and
8 percent this year.
S&P Global Ratings said last week that it considers exchange
rate stability to remain a major priority for Sri Lanka's
policymakers and its central bank, limiting monetary
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 1.1 percent so
far this year, having lost 3.9 percent of its value against the
dollar last year.
Foreign investors bought a net 1.87 billion rupees ($12.4
million) worth of government securities in the week ended March
8, recording the second weekly net inflow for the year. They
have sold a net 61.89 billion rupees of such instruments so far
(Reporting by Shihar Aneez and Ranga Sirilal)