Nov 03, 2016 (Reuters) – The Sri Lankan rupee traded lower on Thursday on dollar demand from importers and as foreign investors sold government securities, dealers said, with the market shrugging off comments by the central bank chief on the stability of the currency.
Central Bank of Sri Lanka Governor Indrajit Coomaraswamy said late on Tuesday that he expected the rupee to stabilise once a stake sale in the southern port of Hambantota to a Chinese investor is completed in four to five months.
Coomaraswamy said that proceeds of the $1 billion stake sale would be converted into rupees, easing the strain on the currency that has been under pressure since mid-September due to seasonal demand for U.S. dollars from importers.
Rupee forwards were active, with one-week forwards trading weaker at 148.90/149.00 per dollar at 0456 GMT, compared with Wednesday’s close of 148.80/90.
“The (dollar) demand is there and there are no (dollar) conversions. The bond selling is putting pressure on the currency,” a currency dealer said, asking not to be named.
Foreign investors have net sold 16 billion rupees ($108.40 million) worth of government securities in the two weeks to Oct. 26, data from the central bank showed.
Sri Lankan shares were firmer, with the benchmark Colombo stock index up 0.22 percent at 6,442.92 as of 0505 GMT. Turnover stood at 34.9 million rupees ($235,175).