March 23, 2017 / 6:53 AM / in 4 months

Sri Lankan rupee steady ahead of cbank rate review; stocks fall

2 Min Read

COLOMBO, March 23 (Reuters) - The Sri Lankan rupee traded steady in dull trade on Thursday as dollar demand from importers offset sales of the greenback by exporters, while investors awaited the central bank's monetary policy review.

Rupee forwards were active, with two-week forwards trading steady at 152.40/50 per dollar at 0607 GMT.

Sri Lanka's central bank could raise its key policy rates in the coming months if it skips a chance to tighten at its second monetary policy review of the year, a Reuters poll showed, two weeks after the International Monetary Fund called for further tightening. The policy announcement is due on Friday at 0200 GMT.

"The market is waiting for direction from the policy announcement," said a currency dealer, asking not to be named.

"We can see the pressure is mounting, with a state bank buying dollars directly from the clients to cover their bills."

Dealers said the central bank could raise rates to prop up the rupee as rising imports and outflows due to rupee bond sales by foreign investors pressure the currency.

The central bank raised the spot rupee reference rate by 25 cents to 151.60 on Monday. Dealers said the banking regulator had been preventing spot rupee trades below 151.35 per dollar since March 8.

Central bank officials were not available for comment.

Foreign investors net sold government securities worth 1.41 billion rupees ($9.3 million) in the week ended March 15, after two weeks of net inflows. They have net sold 63.3 billion rupees of such instruments so far this year.

Sri Lankan shares were down 0.3 percent at 5,977.01, as of 0618 GMT. Turnover stood at 433.4 million rupees.

$1 = 151.5000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri

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