Rupee eases slightly on importer dollar demand

Friday, 6 May 2016 00:02 - - {{hitsCtrl.values.hits}}

Reuters - The Sri Lankan rupee ended slightly weaker on Thursday as late demand for the U.S. currency from importers outpaced dollar sales by foreign banks, dealers said.

The spot rupee reference rate stood at 145.70, dealers said, as Sri Lanka’s central bank sold the spot currency at that rate through state-run banks for a third straight session.

The banking regulator had fixed the spot trading rate at 143.90 per dollar until Monday, dealers said, but officials from the central bank were not available to comment on whether it had indeed intervened in the forex market.

Trading in spot has been intermittent since Jan. 27 and this was the case on Thursday as well as the spot was barely bid, but the slight movement in short-term dollar/rupee forwards indicated the rupee was being traded weaker.

The spot next dollar/rupee forwards closed at 146.15/30 per dollar, compared with Wednesday’s close of 146.10/20.

The spot next, which basically acts as a proxy for the spot currency, indicates the exchange rate for the day following the conventional spot settlement, meaning it is five days ahead.

Dealers said a loan deal with the IMF and a likely $1.5-billion bond issue in the short term have helped build confidence in the currency.

The IMF said last week it had reached a staff-level agreement with Sri Lankan authorities for a $1.5 billion, three-year loan to help the island nation avert a balance of payments crisis.

And, on Sunday, a top finance ministry official told Reuters that the government will raise $1.5 billion by selling 10-year sovereign bonds within the next 10-12 days.