Rupee forwards rise on dollar selling by foreign bank

Saturday, 30 January 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan rupee forwards strengthened on Friday as a foreign bank sold dollars, while the spot rupee was not traded as banks were reluctant to trade it below the 144.00 level amid moral suasion by the central bank, dealers said.

Dealers said the one-week forward, which acted as a proxy for the spot currency, ended at 144.30/40 per dollar, compared with Thursday’s close of 144.45/55. “There were inflows today and the forwards trade firmer,” said a dealer asking not to be named.

“There was heavy moral suasion by the central bank and banks were cautious in trading the spot rupee. There was no direct intervention from the central bank. This is a temporary relief. But we may see possible fall in the rupee once import demand picks up.”

Officials at the central bank were not available for comments.

The rupee is under pressure despite a 150-basis-point increase in commercial banks’ statutory reserve ratio from Jan. 16. The central bank kept its key policy interest rates unchanged on Monday.

Commercial banks parked Rs. 56.340 billion ($391.39 million) of surplus liquidity on Friday using the central bank’s deposit facility at 6%, official data showed.

The central bank’s net holding of government securities increased by Rs. 22.574 billion, official data showed.