Sri Lankan rupee edges up on state bank dollar sales

Sept 20, 2016 (Reuters) – The Sri Lankan rupee gained slightly on Tuesday as a state bank sold dollars after the local currency fell due to importer greenback demand, with traders unwilling to trade the rupee below the level desired by the central bank, dealers said.

The spot rupee was at 145.80/146.00 per dollar at 0638 GMT, slightly firmer from Monday’s close of 145.90/146.00. One-week forwards were at 145.95/146.15, compared with the previous close of 146.12/22.

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

“The rupee is under pressure mainly because of lack of (dollar) supply to meet importer demand. A state bank started selling when the spot started to trade below 146.00,” said a currency dealer, asking not to be named.

“The moral suasion is also there when the spot traded below 146.00.”

Dealers had expected seasonal importer demand to pick up from mid-October.

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.

Sri Lankan shares slipped, with the benchmark Colombo stock index down 0.27 percent at 6,433.23 as of 0640 GMT. Turnover was at 128.2 million rupees ($879,286.7).

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