Rupee edges up on foreign bank dollar sales

REUTERS: The Sri Lankan rupee strengthened yesterday as a foreign bank sold the dollar, while investors awaited the International Monetary Fund’s approval for the disbursement of a loan as well as a proposed sovereign bond sale, dealers said.
Rupee forwards were active, with two-week forwards closing at 153.10/30 per dollar, compared with Tuesday’s close of 153.25/30. “A foreign bank was selling the dollar and state banks were buying the dollar,” a currency dealer said, asking not to be named.

Dealers said a government decision announced yesterday to double the borrowing limit of development bonds to US $ 3 billion would increase the dollar liquidity in the market and could reduce the pressure on the currency.
After the government’s announcement, yields in local T-bill slipped nine basis points at a weekly auction.
Dealers said the market was also keen on inflows from an around US $ 1.5 billion borrowing through a proposed sovereign bond issue.
Sri Lanka has seen a surge in foreign inflows into equities and government securities since early this month.
Foreign investors bought equities worth a net Rs.12.3 billion in 24 consecutive sessions through Tuesday.
They have also been net buyers of government securities worth Rs.4.17 billion in the week ended April 19. However, they have been net sellers to the tune of Rs.58 billion worth of government bonds so far this year.