Sri Lankan rupee steady, remittances offset importer dlr demand

Sept 02, 2016 (Reuters) – The Sri Lankan rupee traded steady on Friday as dollar sales by banks from inward remittances offset importer dollar demand, dealers said.

The spot rupee was at 145.50/55 per dollar at 0715 GMT, hardly changed from Thursday’s close of 145.50/57, while one-week rupee forwards were at 145.70/75 compared to Thursday’s close of 145.75/8.

“Today we see some inward remittances and the demand (from importers) is also there,” a currency dealer said, asking not to be named.

After leaving the key policy rates steady, central bank governor Indrajith Coomaraswamy said on Tuesday that the currency was not under upward pressure as capital inflows had not been of sufficient magnitude to exert such pressure.

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.

Dealers have said the rupee could appreciate if the central bank does not buy the U.S. dollar from the market since capital inflows into government securities have begun, and also due to $1.5 billion sovereign bond inflows.

Dealers also said the central bank was not seen intervening in the market to defend the currency. Central bank officials were not available for comment.

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

The central bank absorbed a net $600 million from the market since the International Monetary Fund (IMF) approved a $1.5 billion, three-year loan in June, Coomaraswamy said.

Meanwhile, Sri Lankan shares traded steady, with the benchmark Colombo stock index up 0.04 percent to 6,542.80 as of 0723 GMT. Turnover was at 738.4 million rupees ($5.09 million).