REUTERS: The Sri Lankan rupee ended weaker yesterday due to dollar demand from a state bank to cover import bills.
Rupee forwards were active, with two-week forwards ending at 152.70/80 per dollar, compared with Monday’s close of 152.65/75.
“There was some selling (of dollars) by a foreign bank, but a state bank bought. They have some large import bills to cover and therefore they bought dollars from the market,” said a currency dealer, asking not to be named.
The rupee is under pressure due to the higher seasonal import demand some oil bills, dealers said. The Central Bank on Monday raised the spot rupee reference rate by 10 cents to 151.70 after the bank raised it by 25 cents on March 20. On Friday, the Central Bank raised interest rates for the first time in eight months, saying tighter policy was a precaution against a build-up of inflationary pressures.
Analysts said the rate hike, a move aimed at easing pressure on the rupee, could help stabilise the domestic currency that is hurt by rising imports and outflows due to rupee bond sales by foreign investors.
Foreign investors net bought government securities worth 70 million rupees ($461,285) in the week ended March 22. They have net sold Rs.63.2 billion of such instruments so far this year.