REUTERS - Sri Lankan rupee forwards edged up yesterday as dollar conversions by foreign investors and exporters surpassed importer demand for the U.S. currency, dealers said. The spot rupee, which was traded actively for a third straight day, also rose, dealers said. Dollar/rupee forwards, known as spot next, were at 145.02/12 per dollar at 0546 GMT, compared with Thursday’s close of 145.53/63.
Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is five days ahead for yesterday’s trade.
Dealers said the spot currency, which on Wednesday started trading actively for the first time since Jan. 18, was active for a third straight day yesterday.
The spot rupee was trading at 145.00/10 per dollar compared with Thursday’s close of 145.50/60.
“Foreigners are selling (dollars) to buy local rupee bonds. The spot is actively trading and spot next is trading for the trades below 145.50 as the spot is not allowed to trade below 145.50,” a currency dealer said.
The spot rupee reference rate was pegged at 145.75 through Wednesday, and at 145.50 since Thursday.
Two state-run banks, through which the Central Bank usually directs the market, sometimes sell dollars to curb falls in the rupee. Central Bank officials were not available for comment on whether it had intervened in the forex market. Dealers expect the local currency to strengthen further, after the International Monetary Fund’s (IMF) executive board approved a three-year $1.5 billion loan to support the country’s economic reform agenda.
Prime Minister Ranil Wickremesinghe told parliament on Thursday that the government will take measures to abolish the exchange control act and also soon introduce a capital gains tax but did not provide any time frame.
The Sri Lankan stock index was up 0.05 percent at 6,531.09 as of 0605 GMT on a turnover of Rs.113.6 million ($784,530.39).