Rupee steady; downward pressure prevails

REUTERS: The Sri Lankan rupee ended steady yesterday, but dealers expect it to fall further on growing demand for dollars from foreign banks that facilitate sales of government securities by foreign investors.
The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, dealers said.
Rupee forwards were active, with two-week forwards ending at 150.60/75 per dollar, steady from Friday’s close.
“The market mainly focused on bonds than currency,” a currency dealer said, asking not to be named.
The Central Bank accepted Rs.55 billion worth of bonds at auction yesterday.
Last week, the Central Bank’s moral suasion prevented further decline even as the monetary authority signalled a change in its intervention policy.
Officials from the Central Bank were not available for comments.

Central Bank Governor Indrajit Coomaraswamy said on Tuesday that defending the rupee with foreign exchange reserves “doesn’t seem sensible” as it has always been followed by a sharp depreciation in the currency. The spot rupee was also hardly traded, dealers said.