REUTERS: The Sri Lankan rupee ended slightly weaker as dollar demand by importers late in the day outpaced selling of the U.S. currency by foreign banks amid hopes the rupee would rise following US $ 1.5 billion in inflows from a sovereign bond issue, dealers said.
Sri Lanka raised US $ 1.5 billion in its first sale of dual-tranche eurobonds on Monday, although at a lower borrowing cost than initially expected, as yield-hungry global investors put in over US $ 5.5 billion in offers. Earlier this week, Finance Minister Ravi Karunanayake said the rupee would “obviously appreciate” on inflows from the sovereign bond issue.
Sri Lankan rupee one-week forwards, which have been acting as a proxy for the spot rupee, ended at 146.15/30 per dollar, slightly weaker than Wednesday’s close of 146.10/25.
“Foreign banks sold (dollars) as the foreigners are buying bonds, but rupee ended weaker on importer dollar demand. We have seen a state bank buying, probably to cover a petroleum bill,” said a currency dealer, asking not to be named.
The spot rupee was not quoted, but the spot-next, which are rupee forwards settled three days after the spot rupee settlement, ended weaker at 146.00/15 per dollar, lower than Wednesday’s close of 145.95/15, dealers said.
The spot rupee is tightly managed by the Central Bank and market participants use the forward market levels for guidance on the currency.