2 Min Read
COLOMBO, May 24 (Reuters) - The Sri Lankan rupee traded slightly weaker in tepid trading on Wednesday due to dollar demand from importers, with the rupee expected to ease further on importer dollar demand and the central bank's move to buy dollars to boost reserves, traders said.
The central bank has purchased around $400 million directly from the market so far this year, governor Indrajit Coomaraswamy said last week, adding it was targeting $1.2 billion in direct market purchases of dollars to boost the island nation's reserves this year.
Dealers said the central bank's plan will keep the rupee under pressure, with the market expecting about 4-6 percent depreciation in the currency this year.
Rupee forwards were active, with spot-next forwards trading at 152.95/153.00 per dollar at 0548 GMT, compared with Tuesday's close of 152.80/90.
One-week forwards were at 153.00/15, compared with the previous session's close of 152.90/153.00.
The spot rupee did not trade on Wednesday.
The central bank fixed the spot rupee reference rate at 152.50 on May 5.
The central bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.
Currency dealers said the market was waiting for policy direction from new finance minister Mangala Samaraweera after President Maithripala Sirisena switched the finance and foreign ministers in a cabinet reshuffle on Monday in a bid to restore confidence in the administration's handling of the economy.
The appointment came after Sri Lanka missed its December-end reserves target agreed with the International Monetary Fund (IMF) for a $1.5 billion, 36-month loan.
Sri Lankan shares were up 0.2 percent at 6,703.14 as of 0601 GMT. Turnover stood at 214.6 million rupees ($1.41 million).
$1 = 152.5000 Sri Lankan rupees Reporting by Ranga Sirilal; Editing by Amrutha Gayathri