February 23, 2017 / 6:17 AM / in 9 months

Sri Lankan rupee flat; dollar sales offset importer demand

COLOMBO, Feb 23 (Reuters) - The Sri Lankan rupee traded steady on Thursday as exporter dollar sales offset demand for the greenback from importers, in the absence of central bank intervention, dealers said.

Rupee forwards were active with two-week forwards trading at 153.40/50 per dollar at 0539 GMT, compared with Wednesday’s close of 153.40/70. It hit a low of 153.70 in early trade.

The two-week forwards had fallen 1 percent since Monday through Wednesday.

The currency continued to be under pressure due to dollar demand from importers ahead of the traditional Sinhala-Tamil new year in mid-April, while foreign investors continue to exit government securities, dealers said.

Foreign investors have net sold $325.70 million worth of securities in the seven weeks to Feb. 15, surpassing the total net foreign outflow of $324.3 million in the comparable period in 2016, according to the latest central bank and government data.

The currency weakness comes at a time when a mission from the International Monetary Fund (IMF), which has asked the central bank to maintain a flexible exchange rate, is in Colombo for the second review of a $1.5 billion loan.

Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed last week, even as the island-nation is in the process of raising up to $2.5 billion from foreign borrowing.

The rupee has weakened 1.1 percent so far this year. It fell 3.9 percent last year, following a 10 percent drop in 2015.

Sri Lankan shares were up 0.1 percent at 6,137.16 as of 0550 GMT. Turnover was 94.4 million rupees ($622,076). ($1 = 151.7500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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