REUTERS: The Sri Lankan rupee ended slightly weaker yesterday as importer dollar demand surpassed early greenback sales by exporters, dealers said.
Rupee forwards were active, with the spot-next ending at 152.60/70 per dollar, compared with Friday’s close of 152.55/65.
The spot rupee, which resumed trading on May 5 after four months, was not active yesterday, with the Central Bank’s reference rate at 152.10.
“There was some importer demand. We have seen some sizable demand today, even some state banks bought dollars after the weekend,” said a currency dealer.
But dealers said the positive news about the Generalised System of Preferences Plus helped the rupee.
The Sri Lankan government said in a statement on Thursday that the Council of Ministers of the European Union had approved the country’s GSP Plus application and the official notification on its entry will be finalised next week.
Finance Minister Ravi Karunanayake said on Sunday revenue rose 17 percent in the first quarter compared with a year ago, surpassing the government’s expectations, due to higher tax collection.
Central Bank Governor Indrajit Coomaraswamy said on Tuesday that the monetary authority did not want to allow the rupee to fall “too quickly”, but suggested further weakness in the exchange rate is on the cards as policymakers sought a competitive currency.
The downward adjustment on the spot currency was to make the rupee more competitive, he added.
The monetary authority on Tuesday kept the policy rates steady as expected, saying inflation was expected to decelerate to mid-single digit levels by end-2017.
Sri Lanka drew a blowout response in its return to the international bond market, attracting orders of more than US $ 11 billion from 500 accounts for a US $ 1.5 billion 10-year bond.
Currency dealers expect higher dollar liquidity from the inflows to help stabilise the rupee.
The country saw inflows of US $ 1.5 billion last week from a sovereign bond and also expects US $ 1 billion from two separate syndicated loans and the Central Bank chief said a US $ 450 million syndicated loan is almost decided and the inflows are expected next week.
The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.
The island nation has seen inflows into equities and government securities since early April.