COLOMBO Dec 28 Sri Lankan rupee fell on
Wednesday on modest dollar demand after the central bank raised
the spot reference rate, while the apex bank's new limit on
one-week forwards capped further loss, dealers said.
The market, however, awaited further clues from the central
bank after it said on Friday that depreciation of the currency
was not necessarily negative for the economy.
Rupee forwards were active, with one-week forwards
trading at 150.00/20 per dollar, down from Tuesday's close of
"The central bank raised the spot reference rate by 30 cents
today to 149.80 and it also asked banks not to trade one-week
forwards below 150.00 per dollar," a currency dealer said,
asking not to be named.
Officials from the central bank were not immediately
available for comments.
Dealers said the central bank last week raised the spot
preference rate by 40 cents to 149.50 following another 40 cent
hike in the previous week.
The central bank said on Friday that "it is important to
understand that depreciation of the rupee has not only negative
implications, but also positive implications on the Sri Lankan
Spot-next forwards and the spot rupee were hardly
traded, dealers said.
The central bank may allow market forces to determine the
rupee's direction next year, some dealers said, while some
others believe the bank would have to let the currency
depreciate or raise key policy rates at a meeting this week.
Sri Lankan shares were 0.21 percent firmer as of 0744
GMT, recovering from their lowest close since April 6 hit in the
Turnover stood at 903.9 million rupees ($6.04 million).
($1 = 149.7000 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Vyas Mohan)