COLOMBO, April 26 The Sri Lankan rupee
strengthened on Wednesday as a foreign bank sold the dollar,
while investors awaited the International Monetary Fund's
approval for the disbursement of a loan as well as a proposed
sovereign bond sale, dealers said.
Rupee forwards were active, with two-week forwards
closing at 153.10/30 per dollar, compared with Tuesday's close
"A foreign bank was selling the dollar and state banks were
buying the dollar," a currency dealer said, asking not to be
Dealers said a government decision announced on Wednesday to
double the borrowing limit of development bonds to $3 billion
would increase the dollar liquidity in the market and could
reduce the pressure on the currency.
After the government's announcement, yields in local t-bill
slipped 9 basis points at a weekly auction.
Dealers said the market was also keen on inflows from an
around $1.5 billion borrowing through a proposed sovereign bond
Sri Lanka has seen a surge in foreign inflows into equities
and government securities since early this month.
Foreign investors bought equities worth a net 12.3 billion
rupees in 24 consecutive sessions through Tuesday.
They have also been net buyers of government securities
worth 4.17 billion rupees in the week ended April 19. However,
they have been net sellers to the tune of 58 billion rupees
worth of government bonds so far this year.
(Reporting by Shihar Aneez; Editing by Amrutha Gayathri)