Sri Lankan rupee edges down on importer dollar demand

July 27, 2016 (Reuters) – The Sri Lankan rupee edged down on Wednesday due to importer dollar demand as hopes of the currency’s appreciation after a recent sovereign bond inflow evaporated, dealers said.

One-week rupee forwards, which have been acting as a proxy for the spot rupee, traded at 146.20/40 per dollar, slightly weaker than Tuesday’s close of 146.10/30.

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

The market has shrugged off the speculation of a strong rise in the rupee as the island nation’s heavy debt repayment reduced the dollar availability for the central bank to defend the currency, dealers said.

Finance Minister Ravi Karunanayake said earlier this month that the rupee would “obviously appreciate” on inflows from the country’s first sale of dual-tranche eurobonds, while the Central Bank Deputy Governor Nandalal Weerasinghe said last week that the $1.5 billion raised from the bond sale had been absorbed into foreign reserves.

The spot rupee was not traded on Wednesday.

Spot-next, which are rupee forwards settled three days after the spot rupee settlement, were trading at 146.10/30 per dollar compared with Tuesday’s close of 145.90/146.20.

The Sri Lankan stock index was up 0.06 percent at 6,391.56 as of 0446 GMT, with a turnover of 61.3 million rupees ($419,575.6).

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