Sri Lankan rupee edges up as tight liquidity prompts dollar sales

Sept 30, 2016 (Reuters) – The Sri Lankan rupee traded slightly firmer on Friday, after four straight sessions of losses, as tight rupee liquidity triggered dollar sales by some banks, dealers said.

The spot rupee was at 146.75/90 per dollar at 0556 GMT, compared with Thursday’s close of 146.90/147.00.

The rupee has fallen 0.58 percent so far this week.

“A few banks are selling dollars due tight rupee liquidity following yesterday’s bond auction,” a currency dealer said asking not to be named.

Sri Lanka’s central bank will conduct a reverse repo auction for 55 billion rupees ($374.58 million) on Friday, through which it absorbs liquidity from the banking system.

The central bank’s decision on Wednesday to hold key monetary policy rates steady suggested that policy makers were keen to support a slowing economy even as they kept a tight leash on rampant credit growth, analysts said.

After the rate decision, treasury bill yields dipped between 16 and 33 basis points.

The central bank is under pressure from the International Monetary Fund (IMF) to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further.

Sri Lankan shares gained, with the benchmark Colombo stock index up 0.25 percent at 6,544.93 as of 0600 GMT. Turnover was at 360.7 million rupees ($2.46 million).

Notify of
Inline Feedbacks
View all comments