COLOMBO, Sept 22 (Reuters) – The Sri Lankan rupee edged up on Thursday as dollar sales by a foreign bank helped currency forwards outpace importer dollar demand, but the market expects the rupee to be under downward pressure due to a rise in demand for imports, dealers said.
Rupee forwards were actively traded and one-week forwards were at 146.30/40 at 0645 GMT, firmer from Wednesday’s close of 146.60/70.
“The one-week forwards traded at 146.55 in early trade. But they appreciated due to dollar sales by a foreign bank, possibly from stocks- and bond-related inflows,” a currency dealer said, asking not to be named.
He said the implied spot rate was 146.25/35, though the spot did not trade after the central bank’s moral suasion on Tuesday.
Traders were unwilling to trade the spot rupee below 146.00 , the level desired by the central bank, on Tuesday, dealers said.
The spot rupee was quoted at 145.90/146.40 at 0645 GMT.
The spot rupee is usually managed by the central bank and market participants use the forward market levels for guidance on the currency.
Officials from the central bank were not available for comment.
Another dealer said the market expects the local currency to be under downward pressure in the coming weeks.
“The usual seasonal importer demand is expected to pick up from now and will continue until mid-December.”
Sri Lankan shares gained, with the benchmark Colombo stock index up 0.25 percent at 6,467.48 as of 0659 GMT. Turnover was at 1.27 billion rupees ($8.70 million). ($1 = 145.9000 Sri Lankan rupees)