COLOMBO Dec 22 The Sri Lankan rupee fell on
Thursday as importer demand for the greenback outpaced inflows
from remittances and dollar conversions by exporters, dealers
Also, weighing on sentiment were dollar purchases by
state-controlled banks, they added.
The rupee forwards were active, with one-week
forwards trading at 150.95/151.00 per dollar, compared with
Wednesday's close of 150.50/90.
"There is importer demand. Inflows from remittances and
conversions from exporters are less than importer demand. We
also see state banks buying dollars, which has put pressure on
the rupee," said a currency dealer, asking not to be named.
Spot-next forwards and the spot rupee were hardly
traded, dealers said.
Dealers expect the central bank to hold the rupee around 150
levels until the year-end and then allow market forces to
determine the rupee's direction.
The central bank is also buying dollars to build up
reserves, in line with its commitment to the International
Monetary Fund, dealers said.
Other dealers said the central bank would have to let the
currency depreciate or raise key policy rates at a monetary
board meeting later this month.
Finance Minister Ravi Karunanayake told Reuters in an
interview on Tuesday that the currency would recover and be
steady next year with expected foreign inflows.
The central bank increased the spot reference rate by 30
cents to 149.10 after the Fed raised interest rates by 25 basis
points last week. It raised the reference rate by a total 40
cents last week.
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 said they expect some capital outflows as an
immediate reaction to the Fed rate hike, and have expressed
concern that the government's foreign borrowing cost would rise
in the short term.
Foreign investors net sold 52.3 billion rupees ($350.77
million) of government securities in the eight weeks ended Dec.
Sri Lankan shares hit their lowest since April 7 and
were down 0.2 percent at 6,215.02 as of 0745 GMT.
Turnover stood at 89.4 million rupees ($596,995).
($1 = 149.7500 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)