Sri Lanka rupee steady; exporter dlr sales offset by importer demand

Aug 12, 2016 (Reuters) – The Sri Lankan rupee was steady on Friday as dollar sales by foreign investors and exporters were offset by mild demand for the importer greenback, dealers said.

The spot rupee ended at 145.50/53 per dollar at 0636 GMT, compared with Thursday’s close of 145.50/52.

“We see a few foreign banks selling (dollars),” 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 were trading at 145.70/75 per dollar, compared with Thursday’s close of 145.65/72.

Foreign investors bought a net 63.7 billion rupees ($437.5 million) worth of government securities between April 29 and Aug. 3, 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.

Meanwhile, Sri Lankan shares were trading firmer, with the benchmark Colombo stock index up 0.16 percent at 6,525.29 at 0642 GMT. Turnover stood at 347.6 million Sri Lankan rupees ($2.39 million).