REUTERS: Sri Lankan rupee forwards were slightly firmer in dull trading yesterday due to tepid dollar sales by exporters.
Rupee forwards were active, with the two-week forwards trading at 153.05/15 per dollar at 0701 GMT, slightly up from Tuesday’s close of 153.10/20. The financial markets were closed for a Buddhist religious holiday on Wednesday and Thursday.
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.
Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy on Tuesday said 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.
Coomaraswamy said the sovereign bond inflows were expected by end of this week.
Currency dealers expect higher dollar liquidity from the inflows to help stabilise the rupee. The country also expects another 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. Sri Lankan shares were down 0.1 percent at 6,660.23 as of 0706 GMT. Turnover stood at Rs.380.9 million ($2.50 million).