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Sri Lankan rupee steady, but seen easing on cenbank move to boost reserves
May 23, 2017 / 6:42 AM / 6 months ago

Sri Lankan rupee steady, but seen easing on cenbank move to boost reserves

COLOMBO, May 23 (Reuters) - The Sri Lankan rupee was steady on Tuesday, though traders say the currency is set to ease further on importers’ demand for dollars and a central bank move to buy the greenback to boost its reserves.

The central bank has purchased around $400 million directly from the market so far this year, governor Indrajit Coomaraswamy said on Thursday.

Last week, Coomaraswamy said the central bank is 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 action will keep the rupee under pressure, with the market consensus expecting 4-6 percent depreciation of the currency this year.

Rupee forwards were active, with spot-next forwards trading steady at 152.85/95 per dollar, as of 0452 GMT, compared with Monday’s close of 152.85/95.

Two-week forwards were at 153.20/45, compared with the previous session’s close of 153.20/35.

“There is some selling by a foreign bank,” said a currency dealer, who added that trading was subdued.

The spot rupee did not trade on Tuesday.

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 a multiple times.

Currency dealers said the market was awaiting policies from the new finance minister, Mangala Samaraweera, after President Maithripala Sirisena switched the finance and foreign ministers in a cabinet reshuffle on Monday in a bid to restore confidence in the administration’s handling of the economy.

The new appointment came after Sri Lanka missed its December-end reserves target agreed with the International Monetary Fund (IMF) for a $1.5 billion, 36-month loan.

Sri Lankan shares were down 0.26 percent at 6,709.40, as of 0501 GMT. Turnover stood at 448.8 million Sri Lankan rupees ($2.94 million). ($1 = 152.7500 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Sherry Jacob-Phillips & Shri Navaratnam)

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