REUTERS: The Sri Lankan rupee fell yesterday on importer dollar demand and fewer exporter conversions, even as investors said the currency could weaken further after the Central Bank decided to buy dollars directly from the market to boost reserves.
Rupee forwards were active, with spot-next forwards trading at 152.90/153.00 per dollar at 0533 GMT, compared with Thursday’s close of 152.85/90. One-week forwards were trading at 153.15/25, compared with the previous session’s close of 152.95/153.00.
Sri Lanka’s central bank is targeting US$1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, said Indrajit Coomaraswamy, the monetary authority’s chief, on Thursday.
That comes after Sri Lanka missed its end-December reserves target agreed with the International Monetary Fund (IMF) for a US$1.5 billion, 36-month loan.
Coomaraswamy said the Central Bank has purchased around US$400 million directly from the market so far this year.
“Exporters are not converting after the Central Bank announcement. They are watching the situation and we can see some importer demand,” a currency dealer said, asking not to be named. The spot rupee did not trade yesterday.
The Central Bank fixed the spot rupee reference rate at 152.50 on May 5.
The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.
Sri Lankan shares were down 0.32 percent at 6,719.38 as of 0613 GMT. Turnover stood at Rs.258.4 million