Sri Lankan rupee edges up on exporter dollar sales

Sri Lanka Rupee vs US Dollar

The Sri Lankan rupee closed marginally firmer on Wednesday in dull trade, as dollar conversions by exporters surpassed mild demand for the U.S. currency from importers and banks, dealers said.

The spot rupee ended at 153.70/80, compared with Tuesday’s close of 153.75/80.

“Trading was dull as there was not much of activity in spot trading. There was no big buying today, but there were some forward trades ahead of Sri Lanka Development Bonds (SLDB),” said a currency dealer.

Sri Lanka aims to raise $500 million this month via development bonds (SLDB), the central bank said on Monday, as the government faces unprecedented debt repayment this year.

Pressure on the currency from imports is expected to prevail until the central bank sorts out new regulations for derivatives, dealers said.

The currency fell 2.5 percent last year and 3.9 percent in 2016.

The central bank, while announcing its key economic policies for the year last week, said it has allowed for more flexibility in determining the exchange rate based on market conditions.

It has intervened only to smoothen rupee volatility and to build up reserves, the banking regulator said.