Sri Lankan rupee trades steady; seen rising on IMF loan, inflows

Sri Lanka-Markets-Analysts

June 7 (Reuters) – The Sri Lankan rupee traded steady on Tuesday as dollar conversions by exporters were offset by dollar demand by importers even as hopes rose the currency would go up slightly after the IMF approved a $1.5 billion loan, dealers said.

The IMF executive board approved the three-year loan over the weekend, targeting reforms aimed at boosting government revenues to reduce the fiscal deficit, improving foreign exchange reserves and reducing public debt.

The global lender said the transition to flexible inflation targeting under a flexible exchange rate regime was one of the pillars of the loan program.

The dollar/rupee forwards, known as spot next, traded at 146.10/20 per dollar at 0651 GMT, little changed from Monday’s close of 146.00/25.

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

The spot currency did not trade on Tuesday.

“There are some dollar conversions and mild importer demand as well. There was no moral suasion by the central bank,” a currency dealer said.

Dealers sais they expect the rupee to rise slightly due to expected inflows including from sovereign bonds and bilateral loans.