June 13, 2017 / 5:40 AM / 7 months ago

Sri Lankan rupee slightly weaker on importer dollar demand

COLOMBO, June 13 (Reuters) - The Sri Lankan rupee traded slightly weaker on Tuesday due to importer dollar demand, dealers said.

Rupee forwards were active, with spot-next forwards trading at 152.90/95 per dollar at 0515 GMT, weaker from Monday’s close of 152.85/90.

One-week forward traded at 153.10/15, compared with Monday’s close of 153.05/10.

“Today, there is some pressure (to depreciate) with some (importer) demand. There are general imports and some oil bills,” a currency dealer said, requesting anonymity.

The rupee has been under pressure after central bank governor Indrajit Coomaraswamy said 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 Tuesday.

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, currency dealers added.

The floods could hurt overall economic growth and also widen the government’s budget deficit with high infrastructure spending.

Sri Lankan shares were down 0.06 percent at 6,659.37, as of 0516 GMT. Turnover stood at 148.2 million Sri Lankan rupees ($970,530.45).

$1 = 152.7000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

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