Sri Lankan rupee forwards slightly firmer on bank dollar sales

June 2 (Reuters) – Sri Lankan rupee forwards edged up on Thursday as banks, led by state-owned lenders, sold dollars amid light demand for the U.S. currency from importers, dealers said.

Dollar/rupee forwards, known as spot next, were at 147.85/148.05 per dollar at 0540 GMT with compared with Wednesday’s close of 148.25/40.

Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is five days ahead for Thursday’s trade.

“A state bank started selling (dollars) at 147.80 and we saw some other banks also selling. The importer demand (for dollar) is there,” a currency dealer said.

Two state-run banks, through which the central bank usually directs the market, at times sell dollars to curb falls in the rupee.

Central bank officials were not available to comment on whether the selling was prompted by the monetary authority.

There was little impact on the rupee from Finance Minister Ravi Karunanayake’s announcement on Tuesday that Japan would lend $4.2 billion to Sri Lanka through both, a loan and bond financing, in the next two years.

The spot currency was not traded on Thursday.

The spot rupee reference rate has been pegged at 145.75, dealers said. Sri Lanka‘s central bank had fixed the spot rate at 143.90 per dollar until May 2.

Dealers said the rupee would continue to face pressure despite foreign inflows into government securities and expectations of further inflows, unless the inflows are large enough to boost reserves.

Foreign investors were net buyers of 7.23 billion rupees ($49.28 million) in the week ended May 25, central bank data showed.

The government is in the process of borrowing up to $3.5 billion from foreign sources via syndicated loans, sovereign bonds, and Islamic bonds, Karunanayake said last week.

Analysts, however, said foreign inflows from such loans or bond issues would ease the pressure on the rupee.

The Sri Lankan stock index was 0.08 percent weaker at 6,537.51 as of 0522 GMT on a turnover of 189.91 million rupees ($1.29 million). ($1 = 147.7000 Sri Lankan rupees)