Sri Lanka rupee edges lower on state name buying

Sept 18, 2007 (LBO) – Strong buying interest from a state name that usually represent government accounts pushed the rupee lower in late afternoon trading with deals done at 113.60 against the greenback, dealers said. Sri Lanka’s cash markets have been tight with some market participants were seen generating rupees through dollar swaps.

The rupee opened at 113.45/55 against the spot dollar but tom bids at

However the spot edged higher after a tom deal by a state name at 113.53 pushed the spot which is settled two days ahead higher, dealers said.

The rupee closed at 113.57/62 with exporters freely selling dollars, dealers said.

Meanwhile the latest trade data showed a further slowdown in imports and a strong export performance which helped trim the trade balance.

Economic analysts have warned that Sri Lanka would have to end energy subsidies, especially to the export sector which can put un-necessary pressure on the exchange rate.

A ministerial committee which has halted increases in the price of diesel and has blocked adjustments to power prices until the end of the year has been blamed by economic analysts for putting pressure on the exchange rates.

Meanwhile cash markets remained tight with markets remaining square and overnight call peaked at around 19.75 percent from lows of 14.5 percent with the high side represented by banks with limits to counterparties.

In bond markets a popular government bond maturing in 2012 was offered at 17.00 percent again after it hit 16.60 with a foreign name suddenly buying into the illiquid bond last week pushing yields down.

However dealers say it is difficult to find firm bids in the market yet. It was traded at around 17.35 percent early last week.

In equity market the benchmark all share index fell 1.15 percent (30 points) while the liquid Milanka index fell 1.04 percent (37.23 points.) .