Rupee steady; importer dollar demand offsets selling by foreign banks

REUTERS - The Sri Lankan rupee was little changed yesterday as dollar demand by importers offset selling of the U.S. currency by foreign banks, even as dealers expect the rupee to rise following $1.5 billion in inflows from a sovereign bond issue.

Sri Lanka raised $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 $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, were at 146.15/40 per dollar at 0618 GMT, little changed from Thursday’s close of 146.15/30. “The importer demand (for dollars) is there today,” 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, were steady at 146.00/15 per dollar, compared with Thursday’s close, 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. The Sri Lankan stock index was up 0.03 percent at 6,403.66 as of 0620 GMT, on a turnover of Rs.201.4 million ($1.38 million).