COLOMBO Feb 13 The Sri Lankan rupee pared early
losses to end steady on Monday, as late exporter dollar sales
offset the demand for the U.S. currency, but pressure of a
depreciation risk weighed on sentiment, dealers said.
Rupee forwards were active with two-week forwards
ended steady at 151.20/25 per dollar.
Sri Lanka's stock and foreign exchange markets were closed
on Friday for a Buddhist holiday.
"The market has factored in the gradual depreciation risk,"
said a currency dealer, requesting not to be named. "The market
expects a 4 percent-5 percent depreciation this year and does
not expect any sharp depreciation like in the past."
The rupee fell 3.9 percent last year, following a 10 percent
drop in 2015. The central bank has allowed the currency to
gradually depreciate since mid-December, revising its spot
reference rate multiple times.
Sri Lanka's central bank governor, Indrajit Coomaraswamy,
said on Wednesday the bank was not planning to abruptly scrap
its support for the rupee.
The rupee has weakened 0.6 percent so far this year, and has
been under pressure due to rising imports and net selling of
government securities by foreign investors, while the central
bank said defending the currency with foreign exchange reserves
did not "seem sensible".
The central bank kept its key rates steady last week for a
sixth straight month, but flagged possible "corrective measures"
in the months ahead in a sign that further tightening might be
on the cards to temper inflation pressures and safeguard a
Foreign investors net sold 31.38 billion rupees ($208.30
million) worth of government securities in the four weeks to
Feb. 8, according to the latest central bank data.
($1 = 150.7000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry