COLOMBO, March 16 The Sri Lankan rupee fell on
Thursday on dollar demand from importers, but moral suasion by
the central bank put a dampener on trade after expectations of a
nearly $1 billion inflow from a bond sale failed to ease
pressure on the currency, dealers said.
Dealers said the banking regulator has been preventing spot
rupee trades below 151.35 per dollar. Central bank officials
were not available for comment.
The spot currency was quoted at 151.75/152.75 per dollar,
but was not traded.
Rupee forwards saw slight activity, with one-month
forwards quoted at 154.10/40 per dollar, compared with
Wednesday's close of 153.75/154.00.
Two-week forwards were quoted at 153.40 per dollar, compared
with Wednesday's close of 152.90/153.10.
"Nothing is happening. Everybody is clueless and nobody
wants to go down and trade," said a currency dealer, asking not
to be named.
On Tuesday, the central bank reversed a transaction on
two-week rupee forwards that was weaker than 152.60 per dollar,
dealers said at the time.
The central bank, on behalf of the government, raised a
record $973.25 million through a Sri Lanka Development Bond
auction on Tuesday, with inflows expected from Friday.
The expectation of inflows did not however change the
perception on the currency, which has been under pressure for
more than three months.
The rupee has depreciated 1.6 percent so far this year,
having lost 3.9 percent of its value against the dollar last
year, and dealers expect the rupee to depreciate between 6
percent and 8 percent this year.
The central bank is struggling to maintain a flexible
exchange rate in the face of heavy foreign outflows from
Foreign investors bought a net 1.87 billion rupees ($12.4
million) worth of government securities in the week ended March
8, recording the second weekly net inflow for the year.
They have sold a net 61.89 billion rupees of such
instruments so far this year.
The country also missed its end-December net internal
reserves target set by the International Monetary Fund for a
$1.5 billion loan approved last year.
Since then, the central bank has been hardly selling dollars
to defend the currency, dealers said.
Last week, the IMF urged the central bank to rebuild foreign
reserves while maintaining exchange rate flexibility.
Meanwhile, Sri Lankan shares were up 0.01 percent at
6,032.92, as of 0735 GMT. Turnover stood at 151.1 million rupees
($1 = 151.7500 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju