COLOMBO Dec 16 The Sri Lankan rupee fell for a
third session on Friday as banks bought the dollar after the
central bank raised spot reference rate further and the U.S.
Federal Reserve signalled more tightening next year, dealers
The dollar stood near a 14-year peak, bond yields were
highly elevated and Asian stocks struggled for traction on
Friday as global markets continued adjusting to the idea of
higher U.S. interest rates.
The Fed raised interest rate by 25 bps on Wednesday and
signalled a faster pace of increases in 2017 as central bankers
adapted to the incoming Donald Trump administration's promises
of tax cuts, spending and deregulation.
Rupee forwards were active with spot-next forwards
traded at 149.50/60 per dollar at 0514 GMT, compared with
Thursday's close of 149.45/55.
"Generally in December we don't see importer demand. But we
have seen some banks including some state banks buying dollars,
may be to cover their positions after the central bank raised
the reference rate," a currency dealer said, asking not to be
On Thursday, the central bank further increased the spot
reference rate by 30 cents to 149.10. A day before, it had
raised the rate by 10 cents.
Officials from the central bank were not available for
The spot rupee was hardly traded, but was quoted at
The rupee usually rises in December ahead of Christmas and
New Year due to remittances from expatriates, but dealers said
the currency was expected to face pressure this time due to
higher dollar demand from importers following the Fed rate hike.
Analysts expect some capital outflow as the immediate
reaction to the Fed rate hike and are also concerned over
government's foreign borrowing cost rising in the short term.
Foreign investors net sold 45.4 billion rupees ($305.6
million) worth of government securities in the seven weeks ended
Sri Lankan shares were down 0.10 percent at 6,279.47
as of 0555 GMT. Turnover stood at 185.59 million rupees ($1.24
($1 = 149.1000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas