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Sri Lankan rupee weaker on importer dollar demand; state bank sales cap fall
May 25, 2017 / 6:30 AM / 6 months ago

Sri Lankan rupee weaker on importer dollar demand; state bank sales cap fall

COLOMBO, May 25 (Reuters) - The Sri Lankan rupee traded lower on Thursday on higher importer demand for dollars, but greenback sales by state-run banks helped curb losses, traders said.

Rupee forwards were active, with spot-next forwards trading at 152.95/153.05 per dollar, as of 0625 GMT, compared with Wednesday’s close of 152.90/153.00.

One-week forwards were at 153.15/25, compared with the previous session’s close of 153.05/15.

“There is a demand from foreign banks while the state banks are selling dollars and preventing the rupee from falling below 153,” said a currency dealer.

However, dealers said it was unclear whether state banks were selling dollars on behalf of the central bank. Central Bank officials were not available for comment.

Sri Lanka’s central bank has purchased around $400 million directly from the market so far this year, governor Indrajit Coomaraswamy said last week, adding it was 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 plan will keep the rupee under pressure, with the market expecting about 4-6 percent depreciation in the currency this year.

The spot rupee did not trade on Thursday.

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 multiple times.

Sri Lankan shares were up 0.2 percent at 6,725.1, as of 0617 GMT. Turnover stood at 135.1 million rupees ($884,451.72).

$1 = 152.7500 Sri Lankan rupees Reporting by Ranga Sirilal; Editing by Sherry Jacob-Phillips

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