Sri Lankan rupee edges up on dollar selling by exporters

Oct 11, 2016 (Reuters) – The Sri Lankan rupee edged up on Tuesday, recovering after three straight sessions of losses on dollar selling by exporters, with moral suasion by the central bank preventing the currency from falling, dealers said.

The rupee is, however, expected to face pressure due to demand for dollars by importers ahead of the festival season in December.

The spot rupee was quoted at 146.85 per dollar at 0705 GMT, but it was hardly traded for a third day running. The spot closed at 146.88/95 last Thursday.

Rupee forwards were active, with the spot-next at 147.00/10, edging up from the previous day’s close of 147.15/25. The spot next fell to as low as 147.35 before exporters started selling dollars, the dealers said.

“Today, we saw moral suasion when the spot-next fell. All the dealers maintained the trade at 147.15 per dollar before some exporter dollar came in,” a currency dealer said, asking not to be named.

Dealers said purchases of government securities by foreign investors have slowed due to a fall in interest rates.

The central bank has been buying dollars from the market to accumulate reserves to meet targets set by the International Monetary Fund under a $1.5-billion loan deal, they said.

Officials at the central bank were not available for comment.

Sri Lankan shares were steady, with the benchmark Colombo stock index 0.01 percent lower at 6,561.80 as of 0714 GMT. Turnover stood at 439.6 million rupees ($3.00 million).