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Sri Lanka rupee ends steady; seen easing later
March 7, 2014 / 12:27 PM / 4 years ago

Sri Lanka rupee ends steady; seen easing later

COLOMBO, March 7 (Reuters) - The Sri Lankan rupee ended unchanged in light volume on Friday as importers mopped up dollars from inward remittances and bank sales, but dealers still expect the local currency to edge lower due to seasonal demand for imports.

The spot rupee ended little changed at 130.55/57 per dollar from Thursday’s close of 130.55/58. The currency has risen 0.37 percent in the last seven sessions through Friday, Thomson Reuters data showed.

One of the two state banks that the central bank generally uses to direct the market bought dollars at 130.55 rupees, two dealers told Reuters.

Dealers said the currency could strengthen in the absence of central bank intervention before a gradual depreciation towards the end of March with seasonal importer dollar demand from the middle of the month.

“We have seen an unexpected appreciation in the currency since last week. Usually it tends to depreciate in March and April due to high imports for traditional new year,” an economist told Reuters on condition of anonymity.

The market has been expecting downward pressure to continue ahead of festival import demand in mid-April and due to equity outflows, though the depreciation is expected to be mild as the central bank has strong reserves to defend the rupee.

However, since Feb. 27, the rupee has been on a gaining trend amid weak demand for dollars from importers, dealers said.

The central bank said on Monday it bought a significant amount of dollars to keep the currency steady.

Foreign investors sold a net 5.39 billion rupees worth of stocks in 20 straight sessions through Friday, and they sold a net 4.57 billion rupees worth of government securities in the week ended March 5.

The rupee has gained about 3.5 percent since it hit a record low of 135.20 on Aug. 28 last year. It lost 2.5 percent in 2013. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

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