Rupee ends marginally higher as banks sell dollar

REUTERS: The Sri Lankan rupee ended slightly higher yesterday as a foreign and a local bank sold dollars, offsetting importer dollar demand, dealers said.
The rupee currency was under pressure on the demand from importers and was seen easing further after the central bank said it would buy dollars directly from the market to boost reserves.
The Central Bank is targeting US $ 1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, Indrajit Coomaraswamy, the monetary authority’s chief, said on Thursday.
A currency dealer said the market was awaiting policies from the new finance minister, Mangala Samaraweera, after President Maithripala Sirisena switched the finance and foreign ministers in a cabinet reshuffle yesterday in a bid to restore confidence in the administration’s handling of the economy.

“Everybody is awaiting for the direction from the new finance minister. We don’t know whether he will push through the reforms of the former minister or he will have his own,” the dealer said. The new appointment came after Sri Lanka missed its December-end reserves target agreed with the International Monetary Fund (IMF) for a US $ 1.5 billion, 36-month loan. Rupee forwards were active, with spot-next forwards ended at 152.85/95 per dollar, compared with Friday’s close of 152.90/153.00.Two-week forwards ended at 153.20/35, compared with the previous session’s close of 153.30/40.
Dealers said the rupee ended firmer due to dollar sales by a foreign bank and a state bank and it was not clear whether the state banks sold dollars on behalf the central bank. The Central Bank officials were not immediately available for comment.The spot rupee did not trade yesterday. The Central Bank fixed the spot rupee reference rate at 152.50 on May 5. Coomaraswamy said the Central Bank has purchased around US $ 400 million directly from the market so far this year. The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.