Rupee steady; bank dollar sales prevent fall

Wednesday, 6 January 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee ended steady on Tuesday, hovering near its record low hit in the previous session, as dollar sales by a private bank offset importer demand for the U.S. currency, dealers said.

The dealers said expectations of a further fall in the rupee discouraged exporters from converting their dollar earnings.

The rupee ended at 144.25/45 per dollar, nearly unchanged from previous session’s record closing low of 144.30/40.

“The importer (dollar) demand was there. However, a private bank started selling dollars at 144.30 and then at 144.25, which prevented the fall,” said a currency dealer, requesting not to be named.

To instill investor confidence, the Central Bank said on Monday it would lift all restrictions on nationals who remit money earned in foreign currencies.

Central Bank Governor Arjuna Mahendran said a steep fall in the rupee has slowed and the currency seems to be stabilising at the current level, due to inflows from remittances.

The Central Bank’s decision to tighten liquidity in the money market with effect from 16 January is yet to ease pressure on the rupee.

The island nation suffered a net outflow of Rs.153.4 billion ($1.06 billion) from foreign holdings in government securities in 2015, the latest data showed.

Commercial banks parked Rs.88.85 billion ($616.16 million) of surplus liquidity on Tuesday using the Central Bank’s deposit facility at 6%, official data showed.