COLOMBO, March 14 The Sri Lankan rupee ended
steady on Tuesday as the central bank's moral suasion prevented
depreciation ahead of a bond auction to raise $830 million,
The central bank reversed a transaction on the two-week
rupee forwards that exceeded 152.60 per dollar, amid dollar
demand from importers and for dividend payments, dealers said.
The market is expecting firm dollar inflows from Sri Lanka
Development Bond auction due later in the day.
"They (the central bank) asked not to bid the two-week
forwards above 152.60. They have reversed a transaction done at
152.75 today," a currency dealer said, asking not to be named.
Central bank officials were not available for comment.
Rupee forwards were active, with two-week forwards
ending at 152.50/75 per dollar, little changed from Monday's
close of 152.50/70.
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.
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 and since then the central bank has been
hardly selling dollars to defend the currency, dealers said.
The IMF last week urged the central bank to rebuild foreign
reserves while maintaining exchange rate
Dealers expect the rupee to depreciate 6 to 8 percent this
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; Editing by