COLOMBO, June 6 The Sri Lankan rupee ended
slightly weaker on Tuesday due to mild dollar demand from
importers, and pressure on the local currency was expected to
ease a bit due to lower imports until September, dealers said.
Rupee forwards were active, with spot-next forwards
ending at 152.88/93 per dollar, compared with Monday's close of
"Some banks bought dollars in smaller quantity. We do not
see much importer demand until September. We also see state
banks buying dollars when they trade around 152.80/85," a
currency dealer said, asking not to be named.
"We don't know if state banks are buying for the central
The rupee has been under pressure after the central bank
governor last month said the bank would allow gradual
depreciation of the currency.
The central bank has set a target of $1.2 billion in direct
market purchases of dollars to boost the island nation's
reserves this year.
The spot rupee, which the central bank had fixed at
152.50 since May 5, did not trade on Tuesday.
Foreign investors bought a net 740 million rupees ($4.86
million) worth of government securities in the week ended May
31. They have sold a net 41.33 billion rupees worth of
securities so far this year.
The dull trade came as investors assessed the extent of
damage to the economy from the recent floods and landslides.
The country's main agricultural crops - tea and rubber -
were hit by the worst torrential rains in 14 years.
Damage to agricultural exports would put pressure on the
rupee, currency dealers said. The hospitality and manufacturing
sectors are likely to be the worst hit, analysts said.
However, dealers said there was some optimism over expected
inflows in the form of international assistance, which could
help offset potential downward pressure on the local currency.
Dealers said the aid inflows could help the rupee, but the
central bank will have to tighten interest rates to curb
unnecessary credit growth and inflationary pressure.
The floods could hurt overall economic growth and also widen
the government's budget deficit with high infrastructure
spending, dealers said.
($1 = 152.8000 Sri Lankan rupees)
(Reporting by Shihar Aneez and Ranga Sirilal; Editing by