Sri Lanka 5-day rupee forwards steady on dlr sales, moral suasion

REUTERS: Sri Lankan five-day rupee forwards traded steady yesterday on selective dollar sales by a state bank and as moral suasion by the Central Bank prevented a fall, despite demand for the greenback from importers, dealers said. Forwards, which are known as spot next and act as a proxy for the spot currency, were trading at 146.50/80 per dollar at 0545 GMT compared with Tuesday’s close of 146.50/60.

“A state bank is selling dollars to (facilitate) select trades at 146.05 and Central Bank moral suasion is there, but there is also demand (for dollars),” said a currency dealer, asking not to be named.
Central Bank officials were not immediately available for comment.
Central Bank Governor Arjuna Mahendran last week said the monetary authority has been intervening in the market to smoothen volatility in an illiquid market.
The spot rupee, which has barely seen any trading since January 27, was not actively traded yesterday as well.

The rupee has been under pressure as foreign investors have sold government securities amid the country’s economic woes, but they have net bought bonds worth Rs.8.84 billion in the last three weeks, central bank data showed.
Sri Lanka borrowed 25 percent more in 2015 than it did in 2014, due to high cost of refinancing loans raised by the previous government without parliamentary approval.
But the country will stop excess government borrowing in a bid to get out of a debt trap, Mahendran said last week. Sri Lanka’s main stock index was up 0.47 percent at 6,418.02 as of 0648 GMT. Turnover stood at Rs.291.2 million.