COLOMBO Jan 3 The Sri Lankan rupee closed
slightly weaker in thin trade on Tuesday amid worry over slowing
foreign fund inflows, while the central bank said defending the
currency with foreign exchange reserves was not sensible.
Central Bank Governor Indrajith Coomaraswamy said after the
markets closed on Tuesday defending the rupee currency
with foreign exchange had become futile as a heavy defence was
always followed with a sharp depreciation.
Rupee forwards were active, with one-month forwards
ending at 151.00/20 per dollar, compared with Monday's close of
One-week forwards were quoted around 150.25/35, while
spot-next forwards and the spot rupee were hardly
traded, dealers said.
"The market is quiet and waiting for some strong inflows,"
said a currency dealer who declined to be identified.
"The central bank governor's statement makes sense. I don't
think the central bank has adequate reserves to defend the
currency strongly. It is more sensible to allow market players
to determine it."
The rupee has been under pressure due to imports and foreign
investors exiting government securities, dealers said.
On Friday, the central bank raised the spot currency
reference rate to 150.00, a record low against the dollar.
The banking regulator raised the spot reference rate by 50
cents last week, after a 40-cent increase in each of the
previous two weeks amid sustained pressure on the currency.
Dealers said the market was bracing for some depreciation in
the rupee in January after the central bank said its
depreciation was not necessarily negative for the economy.
(Reporting by Shihar Aneez and Ranga Sirilal)