Sri Lanka spot rupee steady with intervention

(Reuters) – The Sri Lankan rupee ended steady for a third straight session on Tuesday in dull trade as a state-run bank sold dollars at 133.60 to keep the currency flat, dealers said.

Three-month rupee forwards ended steady at 135.30/40 per dollar as inward remittances offset importer dollar demand.

However, six-month forwards ended slightly weaker at 136.85/95, compared with Monday’s close of 136.80 as a foreign bank converted some dollars to buy rupee-denominated treasury securities, dealers said.

On Thursday, the state bank, through which the central bank usually directs the market, lowered the dollar selling rate by 10 cents from the previous session’s close of 133.70.

"Everybody is on a wait and see mode due to political uncertainty before the upcoming elections," a currency dealer said on condition of anonymity.

The currency has appreciated 0.45 percent since it hit a record low of 134.20 on June 18. However, currency dealers and analysts are wary of whether the central bank can sustain the rupee’s appreciation trend as import demand could pick up due to lower interest rates.

The pressure on the currency also could build up if exporters stop selling dollars until the elections are over.

(Colombo/July 7/2015)

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