April 4, 2017 / 5:52 AM / 10 months ago

Sri Lankan rupee edges up on exporter dollar sales, remittances

COLOMBO, April 4 (Reuters) - The Sri Lankan rupee was slightly firmer in dull trade on Tuesday on inward remittances and exporter dollar sales ahead of the festival season, dealers said.

Rupee forwards were active, with two-week forwards trading at 152.35/50 per dollar at 0507 GMT, compared with Monday’s close of 152.40/45.

“Importer demand is very thin and dollar conversions are happening as these are the last few days to pay bonuses and salaries before the new year. So, exporters are converting. We can see some inward remittances too,” said a currency dealer who did not wish to be named.

The rupee has been under pressure due to dollar demand to meet increased seasonal imports ahead of the traditional new year that is celebrated on April 13-14, dealers said.

The central bank raised the spot rupee reference rate by 10 cents to 151.70 on March 27. It had raised the reference rate by 25 cents on March 20.

The central bank raised interest rates for the first time in eight months on March 24, saying tighter policy was a precaution against a build-up of inflationary pressures.

Analysts said the rate hike, a move that was also aimed at easing pressure on the rupee, could help stabilise the domestic currency that has been hurt by rising imports and outflows due to rupee bond sales by foreign investors.

Foreign investors net sold government securities worth 950 million rupees ($6.26 million) in the week ended March 29. They have net sold 64.2 billion rupees of such instruments so far this year.

Sri Lankan shares were up 0.21 percent at 6,092.89 as of 0512 GMT. Turnover stood at 133.9 million rupees (about $882,663). ($1 = 151.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

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