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Sri Lankan rupee edges down on importer dollar demand; stocks fall
March 22, 2017 / 8:52 AM / in 8 months

Sri Lankan rupee edges down on importer dollar demand; stocks fall

COLOMBO, March 22 (Reuters) - The Sri Lankan rupee fell on Wednesday due to dollar demand from importers, even as the market waited for cues on the direction of key interest rates from the country’s central bank which meets to discuss monetary policy later this week.

Rising imports and outflow from rupee bond sales by foreign investors, however, are expected to exert pressure on the currency, dealers said.

Rupee forwards were active, with two-week forwards trading at 152.45/55 per dollar at 0830 GMT, from Tuesday’s close of 152.40/45.

“Some exporter sales helped prevent a steeper fall,” said a currency dealer, asking not to be named. “We hope the central bank will raise the interest rates to help ease the pressure on the currency.”

The central bank raised the spot rupee reference rate by 25 cents to 151.60 on Monday. It has been preventing spot rupee trades below 151.35 per dollar since March 8.

Central bank officials were not available for comment.

Foreign investors net sold government securities worth 1.41 billion rupees ($9.28 million) in the week ended March 15. This came after two weeks of net inflows.

They have net sold 63.3 billion rupees of such instruments so far this year.

The rupee has fallen 1.27 percent so far this year, and dealers say they expect the currency to weaken 6-8 percent in 2017. It lost 3.9 percent against the dollar last year.

Sri Lankan shares were down 0.78 percent at 5,993.84, as of 0837 GMT. Stockbrokers said concerns over a possible rate hike this week was weighing on sentiment.

Turnover stood at 830.7 million rupees ($5.48 million).

$1 = 151.5000 Sri Lankan rupees Reporting by Shihar Aneez; Editing by Biju Dwarakanath

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