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Sri Lanka rupee slightly stronger foreign bank sales

ECONOMYNEXT – Sri Lanka’s rupee gained on the dollar to trade at 148.10/20 in the one week forward market Monday, up from 148.35/45 Friday, as foreign banks sold some dollars, dealers said.

There is no trading in the spot market, amid heavy moral suasion from authorities.

Dealers say spot US dollars are not allowed to be traded above 145.75 to the US dollar by effective ‘decree’ of the authorities.

There is also no trading in the spot next market (spot plus one day settlement).

Foreign investors have sold about 24 billion rupees of bonds over the past three weeks.

Central Bank Governor Indrajit Coomaraswamy told reporters last week that there was a spike in seasonal imports.

However in December imports fall, and remittances pick up as Sri Lankan guest workers remit money to their loved ones. Exporters also covert dollars to pay early salaries and bonuses to staff.

The rupee cannot permanently fall unless the central bank prints money. The central bank has printed about 20 billion rupees over the past three weeks by injecting cash into interbank markets allowing credit to be boosted. (Colombo/Nov07/2016)

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