May 5, 2017 / 6:46 AM / 5 months ago

Sri Lankan rupee edges up on expected inflows

COLOMBO, May 5 (Reuters) - The Sri Lankan rupee traded slightly higher on Friday on dollar selling by exporters while the market awaited inflows from sovereign bond and syndicated loans, dealers said.

Sri Lanka drew a blowout response in its return to the international bond market, attracting orders of more than $11 billion from 500 accounts for a $1.5 billion 10-year bond.

The issue priced at par to yield 6.20 percent, the tight-end of final guidance in the 6.25 percent area with a 5 basis points margin and well inside the initial 6.625 percent area, reported IFR, a Thomson Reuters Publication.

Rupee forwards were active, as two-week forwards traded tad firmer at 153.15/30 per dollar, from Thursday’s close of 153.25/35.

“With the bond sales, importers are not seen in the market and they are waiting to see the bond sales’ outcome,” a currency dealer said.

Currency dealers expect the rupee to stabilise on higher dollar liquidity after the anticipated inflows.

An IMF statement late on Wednesday also helped boost sentiment. The global lender said its executive board was likely to consider in June Sri Lanka’s request for the completion of a second loan review, a requirement for disbursing a third tranche of aid.

The rupee has been strengthening on expectations of inflows from a sovereign bond issuance and syndicated loans, dealers said.

The country expects to raise up to $1.5 billion via a sovereign bond issuance, and another $1 billion from two separate syndicated loans.

The island nation has seen some inflows into equities and government securities since early April.

Foreign investors have net bought Sri Lankan shares worth 14 billion rupees in the last 29 sessions.

They also net bought government securities worth billion rupees in four consecutive weeks ended on April 26. But they have net sold 57 billion rupees worth of government bonds so far this year.

Sri Lankan shares were up 0.27 percent at 6,620.43, as of 0636 GMT. Turnover stood at 397.6 million rupees ($2.61 million).

$1 = 152.2000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

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