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Sri Lankan rupee edges up in dull trade
May 12, 2017 / 12:29 PM / 6 months ago

Sri Lankan rupee edges up in dull trade

COLOMBO, May 12 (Reuters) - The Sri Lankan rupee ended slightly firmer in dull trade on Friday due to mild dollar selling by exporters.

Rupee forwards were active, with the spot-next ending at 152.55/65 per dollar, compared with Tuesday’s close of 152.65/75. Two-week forwards closed at 153.00/20 per dollar, compared with Tuesday’s close of 153.10/20.

Sri Lankan financial markets were closed on Wednesday and Thursday for a Buddhist religious holiday.

The spot rupee, which resumed trading on May 5 after four months, was not active on Friday, with the central bank’s reference rate at 152.10.

“There were exporter (dollar) sales today after the positive news about the GSP plus (Generalised System of Preferences Plus),” said a currency dealer, referring to a European Union trade concession.

The Sri Lankan government said in a statement on Thursday that the Council of Ministers of the European Union had approved the country’s GSP plus application and the official notification on the entry will be finalised next week.

Sri Lanka’s Central Bank Governor, Indrajit Coomaraswamy, said on Tuesday that the monetary authority did not want to allow the rupee to fall “too quickly”, but suggested further weakness in the exchange rate is on the cards as policymakers sought a competitive currency.

The downward adjustment on the spot currency was to make the rupee more competitive, he added.

The monetary authority on Tuesday kept the policy rates steady as expected, saying inflation was expected to decelerate to mid-single digit levels by end-2017.

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.

Coomaraswamy said the sovereign bond inflows were expected by the end of this week.

Currency dealers expect higher dollar liquidity from the inflows to help stabilise the rupee.

The country also expects another $1 billion from two separate syndicated loans, and the central bank chief said a $450 million syndicated loan is almost decided and the inflows are expected next week.

The central bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.

The island nation has seen inflows into equities and government securities since early April. ($1 = 152.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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