February 3, 2017 / 12:18 PM / 7 months ago

Sri Lankan rupee falls on dollar demand from importers, banks

COLOMBO, Feb 3 (Reuters) - The Sri Lankan rupee fell on Friday due to dollar demand from importers and banks as foreign investors continued to sell government securities, dealers said.

Rupee forwards were active with two-week forwards ending at 151.15/20, compared with Thursday's close of 151.02/10.

"Demand first came in from foreign banks for bond sales, then we saw state banks also buying (dollars)," said a currency dealer, requesting anonymity.

Sri Lanka's central bank is scheduled to hold its first monetary policy review of 2017 on Tuesday.

The central bank could raise its key policy rates in coming months if it skips a chance to tighten next week, a Reuters poll showed, underlining renewed pressure on the rupee after the Federal Reserve's rate hike last month.

The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, while the central bank has said defending the currency was not sensible.

The central bank revised the spot rupee reference rate to a record low of 150.50 from 150.25 earlier this week.

Foreign investors net sold 26.6 billion rupees ($177.10 million) worth of government securities in the four weeks to Feb. 1, according to latest central bank data. ($1 = 150.2000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

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