COLOMBO, March 7 The Sri Lankan rupee was steady
on Tuesday in thin trade as mild importer dollar demand offset
greenback selling by exporters while traders awaited cues on
foreign selling in bonds, dealers said.
Rupee forwards were active, with two-week forwards
were trading steady at 151.85/95 per dollar at 0556 GMT,
unchanged from Monday's close.
"There is no big demand. Everybody is on the watch. They are
waiting to see the direction weather there'll be more bond sales
by foreigners," said a currency dealer on condition of
Dealers said the rupee would be under pressure due to dollar
demand from importers ahead of the traditional Sinhala-Tamil New
Year in mid-April, and as foreign investors continue to sell
Ratings agency Moody's said in a report last week that lower
agricultural exports and higher imports to make up for the loss
in domestic production would weigh on the current account
deficit and foreign exchange reserves.
The government's handouts to farming families affected by
drought could make the fiscal deficit target a challenge, the
rating agency added.
Lower agricultural output due to the drought will force the
government to increase imports, dealers said. For further
imports, the government needs more U.S. currency while there
will be fewer dollars coming in from agriculture commodity
Finance Minister Ravi Karunanayake said on Friday the worst
drought to hit Sri Lanka in 40 years may cost the government up
to 40 billion rupees ($264.7 million), but should not worsen the
Foreign investors bought a net 701 million rupees ($4.64
million) worth of government securities in the week ended March
1, recording the first weekly net inflow for the year. They have
sold a net 63.76 billion rupees of such instruments so far this
Sri Lanka could face balance-of-payments pressure due to
foreign outflows from government securities, a government
document showed last month, even as the island nation was in the
process of raising up to $2.5 billion from foreign
The rupee has weakened around 1 percent so far this year. It
fell 3.9 percent last year, following a 10 percent drop in 2015.
Sri Lankan shares were down 0.03 percent at 6,115.52,
as of 0607 GMT. Turnover stood at 378.5 million rupees ($2.51
($1 = 151.0000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas