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Sri Lanka rupee slips on bank dlr buying, cbank reference rate revision
February 7, 2017 / 6:10 AM / in 10 months

Sri Lanka rupee slips on bank dlr buying, cbank reference rate revision

COLOMBO, Feb 7 (Reuters) - The Sri Lankan rupee was slightly weak in dull trade on Tuesday due to dollar demand banks as foreign investors continued to sell government securities while the central bank revised the spot reference rate to a record low of 150.75, dealers said.

The market shrugged off the central bank’s policy rate decision in which the monetary authority kept rates steady for a sixth straight month.

However, the central bank flagged possible “corrective measures” in the months ahead in a sign that further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.

The central bank has revised the spot rupee reference rate to a record low of 150.75 from 150.50, dealers said.

Rupee forwards were active, with two-week forwards trading at 151.25/30, compared with Monday’s close of 151.18/25.

“Every day we see some foreign selling in government securities. So the rupee is under pressure. The central bank would have revised the spot reference rate to ease the pressure,” a currency dealer said, asking not to be named.

Officials at the central bank were not available for comment.

The rupee has fallen 0.5 percent so far this year and has been under pressure due to rising imports and net selling of government securities by foreign investors, while the central bank has said defending the currency with foreign exchange reserves “does not seem sensible”.

Foreign investors net sold 26.6 billion rupees ($177.10 million) worth of government securities in the four weeks to Feb. 1, according to latest central bank data.

Sri Lankan shares were up 0.15 percent at 6,077.71, as of 0602 GMT. Turnover stood at 317.7 million rupees ($2.11 million).

$1 = 150.3000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair

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