Sri Lankan rupee down on seasonal imports; seen under pressure
COLOMBO, Oct 10 (Reuters) – The Sri Lankan rupee fell on Monday due to seasonal importer dollar demand ahead of the festive season in December, dealers said.
The local currency would be under downward pressure due to continued importer demand until the end of the year, they added.
The spot rupee was quoted at 146.85 per dollar at 0713 GMT, but there was hardly any trade for a second day, dealers said. It closed at 146.88/95 on Thursday.
Rupee forwards were active, and the spot-next was at 147.05/10, compared with the previous day’s close of 146.95/147.05, dealers said.
"Seasonal importer demand is there. The spot did not trade because dealers are scared of the central bank’s retribution after the moral suasion," a currency dealer said, asking not to be named.
The market expects the local currency to be under pressure due to seasonal demand from importers until the year-end.
Dealers said foreign buying into government securities has slowed with the fall in interest rates while the central bank has been buying dollars from the market to accumulate reserves to meet the targets set by the International Monetary Fund under a $1.5 billion loan deal.
Officials at the central bank were not available for comment.
The central bank has been under pressure from the (IMF) to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further.
The central bank usually intervenes to curb volatility in the market.
The rupee has been under pressure due to importer dollar demand, posting a 0.4 percent decline last week, following a 0.65 percent in fall in the preceding week.
The government wanted a strong currency through higher foreign inflows and without interventions, Finance Minister Ravi Karunanayake said last week.
Sri Lankan shares were steady with the benchmark Colombo stock index 0.01 percent higher at 6,582.74 as of 0727 GMT. Turnover was at 259.2 million rupees ($1.77 million).