Sri Lankan rupee steady; importer dollar demand offsets exporter selling

COLOMBO, Aug 24 (Reuters) – The Sri Lankan rupee was steady for an eighth session on Wednesday as exporter dollar sales were offset by importer demand for the greenback, with dealers hesitating to trade the local currency below 145.50 per dollar in anticipation of central bank intervention to defend the rupee, dealers said.

The spot rupee was unchanged at 145.50/55 per dollar, while one-week rupee forwards were at 145.75/80 per dollar at 0815 GMT, compared with Tuesday’s close of 145.76/80.

“There are exporter (dollar) sales. The importer demand is met by the exporter selling,” a currency dealer said, asking not to be named.

He added that though there has been no intervention from the central bank, dealers do not want to trade the spot below 145.50 per dollar, fearing the central bank will suddenly act upon it.

Central bank officials were not available to comment on whether the spot rupee has been capped at 145.50 per dollar.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank retired around $470 million worth of Sri Lanka Development Bonds last week, instead of re-issuing them, using the inflows the country got from a syndicated loan recently, a central bank official told Reuters on Tuesday.

The move may put pressure on the country’s reserves, two dealers said.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities have jumped 28.5 percent to 295.7 billion rupees ($2.03 billion) through Aug. 17 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares edged down, with the benchmark Colombo stock index slipping 0.02 percent to 6,602.76 as of 0746 GMT. Turnover stood at 1.06 billion rupees ($7.31 million).

($1 = 145.1000 Sri Lankan rupees)