COLOMBO Dec 16 The Sri Lankan rupee came off
early falls to close almost steady on Friday as a
state-controlled bank sold dollars, dealers said.
The rupee is still under pressure as banks bought the
greenback after the central bank raised the spot reference rate
on Thursday and the U.S. Federal Reserve on Wednesday signalled
a faster pace of rate hikes next year, said dealers.
Global financial markets have been choppy since the Fed
projected three more interest rate hikes next year at its
meeting on Wednesday, when it also raised rates for the first
time in a year.
The dollar index, which tracks the greenback against
a basket of six major rival currencies, was at 103.000 after
hitting a 14-year high of 103.560 on Thursday, when it gained
1.2 percent to record its biggest daily percentage gain in
nearly six months.
Rupee forwards were active with spot-next forwards
closing at 149.40/70 per dollar, compared with Thursday's close
The state-controlled bank sold dollars at 149.60 levels to
select banks after the local currency touched 149.70 in intraday
"Generally, we do not see importer demand in December. But
we have seen some banks, including some state ones, buying
dollars recently, maybe to cover positions after the central
bank raised the reference rate," said a currency dealer, asking
not to be named.
On Thursday, the central bank increased the spot reference
rate by 30 cents to 149.10. A day before, it had raised the rate
by 10 cents.
Officials from the central bank were not available for
The spot rupee was hardly traded, but was quoted at
The rupee usually rises in December ahead of Christmas and
New Year due to remittances from expatriates, but dealers said
the currency was expected to face pressure this time due to
higher dollar demand from importers following the Fed rate hike.
Analysts expect some capital outflow as the immediate
reaction to the Fed rate hike and are also concerned over the
government's foreign borrowing cost rising in the short term.
Foreign investors net sold 45.4 billion rupees ($305.6
million) worth of government securities in the seven weeks ended
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by