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Sri Lankan rupee edges down on importer dollar demand
February 13, 2017 / 6:33 AM / 10 months ago

Sri Lankan rupee edges down on importer dollar demand

COLOMBO, Feb 13 (Reuters) - The Sri Lankan rupee traded weaker on Monday due to dollar demand from importers after a long weekend, dealers said.

Rupee forwards were active with two-week forwards trading at 151.25/30 per dollar at 0600 GMT, weaker from Thursday’s close of 151.20/25.

Sri Lanka’s stock and foreign exchange markets were closed on Friday for a Buddhist religious holiday.

“The market has factored in the gradual depreciation risk,” said a currency dealer asking not to be named. “The market expects a 4-5 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 that 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 further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.

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.

Sri Lankan shares rose 0.4 percent to 6,118.20, as of 0630 GMT. Turnover was over 547.7 million rupees ($3.63 million). ($1 = 150.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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