Reuters: The Sri Lankan rupee ended steady near its record low on Thursday as importer dollar demand offset inward remittances and greenback selling by a bank, dealers said.

The rupee closed unchanged at 143.22/27 per dollar, not far from an all-time low of 143.30 hit on Friday.

“There was import demand but we have seen a bank selling dollars in the latter part of the day which prevented the fall,” said a currency dealer, asking not to be named.

“It was not clear whether the bank sold dollars on behalf of exporters or inward remittances.”

Dealers said inward remittances for the festival season would ease the pressure on the local currency in the short term.

Prime Minister Ranil Wickremesinghe on Wednesday warned of pressure on the currency due to a China-led global slowdown and a possible Federal Reserve rate hike ahead of elections in the United States.

“We have got to remember that there will be pressure on our currencies and there’ll be an increase in financial market volatility as far as we are concerned,” he said.

Sri Lanka is to seek an IMF stand-by arrangement to fend off a risk that its economy will be hurt next year by repercussions from events affecting major economies.

The rupee has dropped around 8.4% so far this year and 5.9% since the central bank allowed free-float on 4 September, Thomson Reuters data showed.

The central bank sold dollars worth a net $ 277.95 million in October and $ 523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.

Commercial banks parked 130.389 billion rupees ($ 910.54 million) of surplus liquidity on Thursday, using the central bank’s deposit facility at 6%, official data showed.

Secondary market bond yields move in different directions

By Wealth Trust Securities

In secondary bond markets yesterday, yields on the belly end of the curve were seen increasing while on the long end it continued to decline on thin trades. Limited trades were witnessed on the liquid maturities of 01.05.20, 01.08.21 and 01.10.22 at levels of 8.75%, 9.05% and 9.25% respectively against its previous day’s closing levels of 8.63/73, 8.88/98 and 9.12/22 whilst two way quotes on the 15.09.19 and 01.09.23 were seen increasing to levels of 8.60/70 and 9.15/30 respectively. However, buying interest on the 01.08.2025 maturity saw its yield decrease to a low of 9.30% from an opening high of 9.40%. 

In money markets, the OMO department (Open Market Operations) of Central Bank conduct three more auctions for outright sales of Treasury bills yesterday. However, the auction only drained out an amount of Rs. 3 billion in total valued today against its total offered amount of Rs. 15 billion at weighted averages of 5.90% for 70 days, and 5.95% for 77 days as all bids for the shorter maturity of 56 days were rejected. The overnight call money and repo rates remained steady to average 6.31% and 5.97% respectively as surplus liquidity stood at Rs. 130.39 billion yesterday. 

 Rupee trade within a narrow range

 The USD/LKR rate on spot contracts was seen trading within a tight range of Rs. 143.21 to Rs. 143.25 yesterday against its previous day’s closing level of Rs. 143.20/30. The total USD/LKR traded volume for 2 December 2015 was $ 78.80 million. 

Some of the forward USD/LKR rates that prevailed in the market were one month – 143.65/70; three months – 144.40/50 and six months – 145.55/65.