Rupee ends steady amid moral suasion

Friday, 30 December 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee closed steady on Thursday as light importer dollar demand was met by exporter selling and moral suasion by the central bank boosted sentiment, dealers said.

They said the local currency might weaken in January after the Central Bank’s comment on Friday that the rupee’s depreciation was not necessarily negative for the economy. Rupee forwards were active with one-week forwards closing steady at 150.15/25 per dollar. Spot-next forwards and the spot rupee were hardly traded, dealers said.

“We expect some kind of depreciation in the new year after the Central Bank’s statement last week,” a currency dealer said on condition of anonymity.

He said the Central Bank did not want to trade one-week forwards below 150.15 amid unusual year-end importer demand.

Officials from the Central Bank were not immediately available for comment.

A Government move to borrow $ 1 billion to finance some infrastructure projects is cause for some optimism, dealers said.

“If that money comes, we may see some easing of the downward pressure (on the rupee),” the currency dealer said.

Sri Lanka intends to raise up to $1 billion via foreign currency term financing facility to finance the import elements of development projects specified in the 2017 budget, the Government said on Wednesday.

The Central Bank on Wednesday raised the spot reference rate by 30 cents to 149.80. It had raised the reference rate by 40 cents each in the previous two weeks.