Sri Lankan rupee steady as importer dollar demand offsets exporter sales

Sri Lanka Rupee vs US Dollar

The Sri Lankan rupee ended steady on Friday as dollar sales by foreign investors and exporters were offset by importer demand for the greenback, dealers said.

The spot rupee ended steady at 145.50/52 per dollar.

“There was importer demand today, but due to (dollar) selling by foreign banks the rupee ended steady,” a currency dealer said, asking not to be named.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Since a $1.5 billion inflow from a dual-tenure sovereign bond issue, the central bank has largely not intervened in the currency market to defend the rupee. Central bank officials were not available for comment.

One-week rupee forwards ended at 145.70/75 per dollar, compared with Thursday’s close of 145.65/72.

Foreign investors bought a net 66.9 billion rupees ($460.11 million) worth of government securities between April 29 and Aug. 10, central bank data showed.

The central bank on July 28 raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Last week, the rupee gained as foreign investors sold dollars to buy local shares, expecting better profits from corporates on hopes that a recent rate increase by the country’s central bank would help improve the island nation’s macro-economic outlook. ($1 = 145.4000 Sri Lankan rupees)