May 25, 2017 / 12:25 PM / in 7 months

Sri Lankan rupee flat; importer demand offsets dollar sales

COLOMBO, May 25 (Reuters) - The Sri Lankan rupee ended steady on Thursday as importer dollar demand offset selling of the greenback by exporters and state-run banks, traders said.

Rupee forwards were active, with spot-next forwards ending at 152.90/95 per dollar, compared with Wednesday’s close of 152.90/153.00.

One-week forwards ended at 153.10/20, compared with the previous session’s close of 153.05/15.

“There was demand (for dollars) from foreign banks. State banks sold dollars, preventing the rupee from falling below 153,” said a currency dealer.

However, it is unclear whether state banks were selling dollars on behalf of the central bank. Central Bank officials were not available for comment, dealers said.

Sri Lanka’s 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.

The spot rupee did not trade on Thursday.

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.

$1 = 152.7500 Sri Lankan rupees Reporting by Ranga Sirilal; Editing by Vyas Mohan

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