Rupee edges down on importer dollar demand

REUTERS: The Sri Lankan rupee edged down yesterday due to mild importer dollar demand, even as dealers expect the local currency to rise following US $ 1.5 billion in inflows from a sovereign bond issue.

Sri Lanka raised US $ 1.5 billion in its first sale of dual-tranche eurobonds last week, although at a lower borrowing cost than initially expected, as yield-hungry global investors put in over US $ 5.5 billion in offers.

Finance Minister Ravi Karunanayake had said the rupee would “obviously appreciate” on inflows from the sovereign bond issue.

Sri Lankan rupee one-week forwards, which have been acting as a proxy for the spot rupee, were at 146.45/55 per dollar, compared with Friday’s close of 146.25/35.

The spot rupee is tightly managed by the Central Bank and market participants use the forward market levels for guidance on the currency.

“Nothing much is happening and there is slight (dollar) demand,” said a currency dealer, asking not to be named.

The spot rupee and the spot-next, which are rupee forwards settled three days after the spot rupee settlement, were not quoted.

The Sri Lankan stock index was 0.08 percent weaker at 6,417.51 as of 0621 GMT, on a turnover of Rs.114.7 million.