COLOMBO, June 2 The Sri Lankan rupee ended
slightly weaker on Friday as importer dollar demand outpaced
selling of the U.S. currency by exporters and a state-run bank,
while investors assessed the extent of damage to the economy
from last week's floods and landslides, dealers said.
The country's main agricultural crops - tea and rubber -
were hit by the worst torrential rains in 14 years.
Damage to agricultural exports would put pressure on the
rupee, currency dealers said. Analysts said the hospitality and
manufacturing sectors are likely to be the worst hit.
However, dealers said there was some optimism over expected
inflows in the form of international assistance, which could
help offset potential downward pressure on the local currency.
Rupee forwards were active on Friday, with spot-next
forwards closing at 152.85/95 per dollar, compared with
Thursday's close of 152.80/90 per dollar.
"Importer dollar demand was there today. A state bank bought
dollars at 152.85 rupees, probably to pay oil bills, while the
other state bank sold dollars at 152.90," said a currency
Dealers said the aid inflows could help the rupee, but the
central bank will have to tighten interest rates to curb
unnecessary credit growth and inflationary pressure.
The floods could hurt the overall economic growth and also
widen the government's budget deficit with high infrastructure
spending, dealers said.
The rupee has been under pressure after the central bank
governor said on May 18 that the bank would allow gradual
depreciation of the currency.
The spot rupee did not trade on Friday.
The central bank fixed the spot rupee reference rate at
152.50 on May 5.
Foreign investors bought a net 740 million rupees ($4.86
million) worth of government securities in the week ended May
31. They have sold a net 41.33 billion rupees worth of
securities so far this year.
($1 = 152.4000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by