Rupee strengthens on inflows into bonds

COLOMBO (Reuters): Sri Lanka’s rupee gained 0.6 percent against the dollar on Monday to its highest level since mid June on inflows into government bonds and IMF approval to disburse a $415 million loan tranche, dealers said.

The rupee closed at 130.90/131.10 against the dollar, its strongest since June 11, and firmer than Friday’s close of 131.60/80.

Dealers said that the rupee strengthened to 130.50 against the dollar during the day as a foreign banks sold around $100 million to purchase rupee bonds. It later weakened on oil related demand for the greenback.

“We saw some strong inflows into government bonds through a foreign bank,” a currency dealer said on condition of anonymity.

The inflows have helped the rupee recover from a slide that accelerated after the central bank moved to a more flexible exchange rate regime on Feb. 9.

The International Monetary Fund (IMF) late on Friday approved a final disbursement of $415 million to Sri Lanka and said its economy has been set on a more sustainable footing by its tough new monetary and fiscal policies.

The Colombo Stock Exchange’s main index edged down 0.13 percent or 6.45 points to 4,881.77.

The day’s turnover was 321.8 million Sri Lanka rupees ($2.44 million), well below this year’s daily average of 915.2 million rupees.