Sri Lankan rupee 1-wk forwards weaker on importer dlr demand


June 20 (Reuters) – Sri Lankan rupee one-week forwards traded weaker on Monday due to importer dollar demand while dealers said the rupee was under pressure due to lack of exporter dollar conversions amid moral suasion by the central bank .

One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards on Monday, were at 146.00/30 per dollar at 0527 GMT, weaker from Friday’s close of 145.90/146.10.

“The (dollar) demand is there. But there are no sellers in the market and the moral suasion is there,” a currency dealer said, asking not to be named. Dealers said the market is confused with the central bank intervention in both spot rupee and forwards.

Foreign exchange reserves have been falling as the central bank is selling dollars to defend the currency amid some debt repayments, the dealer said.

Central bank officials were not available for comment. The central bank reduced the spot rupee’s peg to 144.50 per dollar on Thursday, from 144.75 in the previous session.

The spot rupee was not actively traded for a fifth straight session on Monday, dealers said. On June 13, the spot closed at 144.85/95 per dollar.

The spot rupee has been pegged down from 145.75 levels in early June after the local currency rose following increased dollar conversions by exporters and overseas funds.

For a third straight day, there was no active trading in three-day dollar/rupee forwards, known as spot next, dealers said.

The forwards closed at 144.85/90 per dollar on Wednesday. Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement.

For Monday’s trade, the spot next settlement takes place three days ahead. Foreign investors net bought 6.67 billion rupees ($46.06 million) worth of government bonds in the week ended June 15, central bank data showed.

A lack of large inflows from exporters, and borrowings were weighing on the currency, dealers said.