COLOMBO Dec 28 The Sri Lankan rupee closed
lower on Wednesday on importer dollar demand after the central
bank raised the spot reference rate, while moral suasion by the
banking regulator capped further losses in the domestic
currency, dealers said.
The market, however, waited for direction from the central
bank after it said on Friday that depreciation of the currency
was not necessarily negative for the economy.
Rupee forwards were active, with one-week forwards
closing at 150.10/25 per dollar, down from Tuesday's close of
Spot-next forwards and the spot rupee were hardly
traded, dealers said.
"The central bank raised the spot reference rate by 30 cents
today to 149.80 and it also asked banks not to trade one-week
forwards below 150.00 per dollar," a currency dealer said,
asking not to be named.
Officials from the central bank were not immediately
available for comment.
Another dealer said lack of exporter conversions weighed on
The central bank last week raised the spot reference rate by
40 cents to 149.50, following another 40 cent hike in the
The central bank said on Friday that "it is important to
understand that depreciation of the rupee has not only negative
implications, but also positive implications on the Sri Lankan
The central bank may allow market forces to determine the
rupee's direction next year, some dealers said, while others
said they believed the bank would have to let the currency
depreciate or raise key policy rates at a meeting on Friday.
(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)