COLOMBO, June 12 The Sri Lankan rupee ended
steady on Monday as inward remittances offset dollar demand from
importers, dealers said.
Rupee forwards were active, with spot-next forwards
closing at 152.85/90 per dollar, unchanged from Friday's close.
"There were some inward remittances and the (importer)
demand was there from a state bank, probably to settle some oil
bills," a currency dealer said, requesting anonymity.
The rupee has been under pressure after central bank
governor Indrajit Coomaraswamy said last month the bank would
allow gradual depreciation of the currency.
The central bank has set a target of $1.2 billion in direct
market purchases of dollars to boost the island nation's
reserves this year.
The spot rupee, which the central bank had fixed at
152.50 since May 5, did not trade on Monday.
Foreign investors bought a net 1.37 billion rupees ($8.98
million) worth of government securities in the week ended June
7. They have sold a net 39.96 billion rupees worth of securities
so far this year.
Trading was dull as investors assessed the extent of damage
to the economy from recent floods and landslides.
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.
However, they added there was some optimism over expected
inflows in the form of international assistance that could help
offset potential downward pressure on the local currency.
While the inflows are likely to help the rupee, the central
bank would have to tighten interest rates to curb unnecessary
credit growth and inflationary pressure, they said.
The floods could hurt overall economic growth and also widen
the government's budget deficit with high infrastructure
($1 = 152.6000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju