Friday, 27 February 2015 00:18
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Reuters: Rupee forwards recovered to end steady on Thursday after falling intraday as dollar selling by banks late in the day erased early losses.
One-week forwards, which fell to 133.50/60 per dollar in early trade, ended steady at 133.40/45, as dollar sales by banks offset importer demand for the greenback earlier in the day, dealers said.
The spot currency ended steady at 132.90/133.10 per dollar for a fifth straight session, keeping to the limits set by the central bank.
Central Bank officials were not immediately available for comment.
Finance Minister Ravi Karunanayake’s statement on Wednesday that Sri Lanka would defend the rupee currency and that the country has enough foreign exchange reserves to prevent any further depreciation created uncertainty in the market, dealers said.
“If foreign investors digest the real situation of the reserves, it could trigger profit-taking in their bond portfolios and will demand more dollars. That might be an additional burden on the reserves while pressurising the exchange rate,” a currency dealer said.
However, Central Bank Governor Arjuna Mahendran said on Thursday that Sri Lanka’s foreign currency reserves were stable after it spent over $ 1 billion in January to defend the rupee currency, and ample dollar inflows would enable it to cover the country’s repayments.
On Monday, the country’s Central Bank lifted a 2-cents-per-day premium limit on the currency after lowering it from 5 cents on 9 February. Since then, rupee forwards have been falling, dealers said.
The Central Bank had defended the spot currency at 132.80 since 6 February through 18 February, before allowing it to fall 10 cents against the dollar on 19 February.
The rupee has fallen 1.4% this year through 20 February due to higher imports, the Central Bank said on Tuesday.
