March 9, 2017 / 12:41 PM / 8 months ago

Sri Lankan rupee ends firmer amid moral suasion

COLOMBO, March 9 (Reuters) - The Sri Lankan rupee ended slightly firmer on Thursday as a state bank sold dollars amid moral suasion by the central bank after the local currency fell on importer greenback demand, dealers said.

Rupee forwards were active, with two-week forwards ending at 152.20/30 per dollar after it traded at 152.35 in intra-day trade. It closed at 152.35/50 on Wednesday.

“There was heavy moral suasion today. Some trades which traded above 152.35 were not allowed to take place,” said a currency dealer on condition of anonymity.

“The central bank was not giving an indication of a level, but they were saying the rates quoted were high.”

Dealers said one of the state banks, which is generally used by the central bank to direct the market, sold dollars up to 152.10 per dollar from 152.25, and eased the pressure on the currency.

Central bank officials were not available for comment.

International Monetary Fund on Wednesday urged the country’s central bank to rebuild foreign reserves while maintaining exchange rate flexibility.

Following its second review of a $1.5 billion three-year loan programme, the IMF said it had discussed with Sri Lankan authorities the need to push forward with reforms due to an uncertain external environment.

Dealers expect the rupee to depreciate between 6 percent and 8 percent this year.

Analysts said inflow from up to $1.5 billion sovereign bond issue sooner than later could help ease some pressure on the currency.

Sources who know about the bond deal said top central bank officials have already left for the United States for a road show for the sovereign bond issue announced last month.

S&P Global Ratings said in a statement on Tuesday that it considers exchange rate stability will remain a major priority for Sri Lanka’s policymakers and its central bank, limiting monetary flexibility.

The central bank is struggling to maintain a flexible exchange rate in the face of heavy foreign outflows from government securities. The rupee has depreciated 1.2 percent so far this year, having lost 3.9 percent of its value against the dollar last year.

Foreign investors bought a net 701 million rupees ($4.64 million) worth of government securities in the week ended March 1, recording the first weekly net inflow for the year. They have sold a net 63.76 billion rupees of such instruments so far this year.

$1 = 151.2500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below