Monday, 16 March 2015 20:34
COLOMBO: Sri Lankan rupee forwards ended weaker on Monday on importer dollar demand, but moral suasion by the central bank prevented a sharper fall as the market waited for cues on interest rates, which have been rising since last month.
Actively-traded two-week rupee forwards fell to 134.00 before the central bank prevented it trading below that level, and ended at 133.85/95 per dollar, down from Friday’s close of 133.75/85, dealers said.
“The central bank prevent the fall of the two-week forwards and a state bank sold dollars in the market,” a currency dealer said, asking not to be named.
The central bank also prevented a fall in the spot rupee and one-week forwards amid importer dollar demand, while exporters looked for cues from market interest rates, which have been rising due to sustained government borrowing.
One-week forwards ended steady at 133.60/75 per dollar, while the spot currency was steady at 132.90/133.20 for the 14th straight session, within the limits set by the central bank.
Central bank officials were not available for comment.
Sri Lanka’s new government has borrowed more than $ 1 billion in four days through Thursday, a move that economists blamed on poor revenue and higher expenditure.
When rates become attractive, exporters convert dollars into rupees, easing pressure on the local currency, dealers said, adding the market was closely monitoring the direction of interest rates.
Copyright Reuters, 2015
